Credibility-Free Budget: Swansong Signals Joke Nearing Its Punchline

JUST HOURS from now, Wayne Swan will deliver his sixth and last budget: a document innocent of credibility, it will consolidate callous spending cuts, dishonest rhetoric, unaffordable promises, and blatant adversarial politics. The budget — and its author — should be dismissed with contempt.

If “this is as good as it gets” — as Paul Keating once declared famously of one of his budgets — then I’d hate to see what things would look like if the excrement had really hit the fan.

The greatest shame about tonight’s budget is that it will be 12 months before the next is delivered; certainly, Prime Minister-in-waiting Tony Abbott and his putative Treasurer, Joe Hockey, will have some kind of emergency budget late this year, but the real thing is a year away and that is to Australia’s cost.

No government is perfect, and no Treasurer completely resists the temptation to engage in a little budget-related politicking; it goes with the turf.

But on the watch of the pious, self-important, bubbling lump of inferiority and resentment who has presided over the five largest deficits in Australian history and — if he’s honest — will tonight announce the sixth, this country has never been so poorly served by its servants in government as it has been by the present Labor regime and its Treasurer.

Perversely, it isn’t even a question of whether the economy is in the worst state it has ever been in: clearly, it isn’t.

But for mismanagement, incompetence, a questionable command of the realities and abstractions of economics, vapid communication skills and sheer political amateurism, this government and this Treasurer are certainly the worst Australia has ever witnessed.

Swan — and his beleaguered colleagues — can’t even get their stories straight.

“Unprecedented revenue writedowns” have been a favourite thing to blame in Labor circles for its failure to deliver on 600 explicit guarantees of a budget surplus tonight: this mythological loss of revenue has “grown” from $7.5 billion in December to $26 billion now (including an increase in the past fortnight alone from $12 billion to $26 billion).

Interestingly, actual government revenue has increased in the past year, by 7%, and the source for this inconvenient figure is Swan’s own 2012-13 mid-year economic and fiscal outlook (MYEFO) papers.

The really interesting thing, of course, is that the “writedown” is nothing more than a measure of just how overcooked Swan’s own inept economic forecasting has been; if you wish upon a star for $26 billion more than you actually have, there’s always the chance you might get it, but the overwhelming probability is that you won’t.

And you can’t blame “experts at Treasury”, as Gillard calls them, if the money doesn’t materialise; they can’t be “experts” one day and brainless, useless dolts the next.

“Writedowns,” however, aren’t the only thing Swan and Gillard blame for their dismal economic stewardship.

John Howard and Peter Costello are responsible, despite not being in government for almost six years.

The Global Financial Crisis is responsible, despite the fact five years — five years — have passed since that point.

The high value of the Australian dollar against other currencies is prominent on Swan’s blame list this year, despite it being lower than it was twelve months ago, even before it began to fall below parity with the US dollar yesterday.

In fact, there is a litany of factors responsible for the appalling budget management Labor has recorded since 2007 — to list them all would take too long — but the really funny thing about that is that none of them, as Swan and Gillard tell the story, is their fault.

Yet the GFC, whilst a “cause” of all the writedowns Swan needs to blame someone or something for — to backtrack for a moment — is also the crucible of Labor’s greatest claim to fame when it comes to the economy: because of Swan, Australia didn’t go into recession!

It’s true; Australia didn’t. But it recorded one of the two quarters of negative economic growth that technically define a recession, and avoided the second with a quarterly growth figure of just 0.1%.

It’s a pretty crass thing to trumpet anyway, but when it is remembered that “stimulus” spending (of $43 billion) is also routinely offered by the government as the justification, along with the GFC, for the almost $300 billion in commonwealth debt it has racked up since taking office, the “credentials” Labor seeks to brandish don’t carry so much weight.

I have noticed in recent days that Swan has been bragging that since 2007, economic growth in Australia has been 13%.

Which is all well and good, until it is remembered that this is barely more than the 2% per annum generally considered to be the minimum level of growth for the economy simply to replace the jobs that are lost each year.

It’s hardly a stellar result.

And it’s only a little more than half the result recorded by Swan’s (and Labor’s) Liberal predecessors over the nearly 12 year lifespan of the Howard government.

Swan, and Labor, have gone out of their way to offend some sizeable communities and sectional interest groups, including several ordinarily disposed to support the ALP.

It has thrown tens of thousands of single mothers off a parenting payment and onto a significantly lower pension in Newstart; in turn, it has failed to increase the rate of that unemployment benefit, despite deafening calls from its own constituencies to do so.

It’s cancelled (carbon tax related) tax cuts, despite repeated pledges to honour these whilst having the temerity to target the Liberal Party for cutting a separate carbon tax related measure.

It has alienated families struggling with soaring cost of living pressures (which the Labor Party essentially states do not exist) by cutting increases to Family Tax Benefit payments.

And it has raised the Medicare levy — to 2% — supposedly to pay for the National Disability Insurance Scheme, 70% of the cost for which is otherwise unfunded.

The Medicare levy increase is particularly salient, as Swan will freeze indexation of Medicare schedule fees; the government says doctors will absorb the effect of this, but anyone with a brain knows the decision will simply add to gap payments struggling families face to visit a doctor, with some finding it prohibitively expensive to seek treatment.

It’s especially offensive given Health minister Tanya Plibersek has been running around for days trumpeting “record” bulk billing rates: how long does Labor seriously expect it to take before these begin to slide in the face of their budget foibles, and slide steeply?

And reports that the budget will seek to “lock in” $100 billion in recurrent spending over ten years, to fund the NDIS and Gonski reforms in education, should be taken with a grain of salt: these might be worthy but they are not affordable, and I wager will never see the light of day in their entirety.

Just a tip.

Swan’s budget is good for some cheap, tacky politics, too: here in Victoria, the state government has decided to build a road tunnel to connect the Eastern Freeway with the Western Ring Road in an attempt to alleviate Melbourne’s congestion problems.

A second mooted major infrastructure project is a 9km underground rail line to boost capacity on the city’s public train network.

Both projects, in round terms, cost $10 billion.

The state Liberal government and the federal (Liberal) opposition are both pledged to fund the road tunnel, and approaches have been made to the Gillard government to contribute.

Instead, Swan’s budget tonight allocates funding to the rail tunnel, and ignores the road.

It’s the sort of cheap gimmick that represents everything wrong with politics in this country, and with the Labor Party approach to it in particular.

And talking of cheap gimmicks, the runup to this budget has been marked by yet more of the ubiquitous slogans Labor politicians seem to think that — if droned on rote, ad nauseum — will cause millions of stupid voters to recognise the “error” of their ways, and change their intended vote in the ALP’s favour.

Labor is “supporting jobs and growth.” The Liberals will “cut to the bone.”

No explanation or rationale of how either of these are occurring — or might occur, if people really are stupid enough to act on their intent to elect the Liberals — is given or offered.

But that’s an old story where this government is concerned; say whatever sounds good and keep on saying it. But far from convincing anyone, it just sounds stupid.

Genuinely stupid.

And that’s the point; an endless trail of broken promises, poor decisions, shocking management and abominable presentation can all be fixed with a bit of smarm, smug spin, a few smart answers, and an imputation that anyone who disagrees is just plain dumb.

Tonight’s budget is the pinnacle (for want of a better word) of a dubious bad joke; six years of Labor government that will reach the punchline in September, as millions of ordinary Australians deal out an electoral drubbing that the party may take decades to recover from, if at all.

Whatever else anyone thinks of this government, or the alternative — and let’s face it, the Liberals could hardly be worse than the masquerade of effective government the ALP has staged — tonight’s budget is an exercise in credibility-free posturing, and should be viewed accordingly.

And if Wayne Swan offers you, your family, your community or your cause any money, believe it when you see it; or, indeed, believe it at your peril.

Budget Surplus Fantasy: We’ll Deliver In 2017, Says Wayne Swan

LIKE a delusional sycophant refusing to acknowledge a reality he has already admitted, self-important bubble and Treasurer Wayne Swan has wasted no time returning to form, and is now talking up the Gillard government’s “credentials” to deliver a budget surplus — in 2017. Get the sick bucket.

After three years of “rolled gold” guarantees and promises of delivering a surplus in next week’s budget — a “guarantee” now blown to bits to the tune of at least $20 billion, probably more — it seems Swan is embarking in a repeat of the process.

In an interview reported by Fairfax for tomorrow’s papers, Swan made the faintly ludicrous claim that next week’s budget would ”a clear pathway back to surplus commensurate with supporting jobs and growth.”

It defies belief that even Swan — so arrogantly sure of himself, despite his clear limitations as Treasurer — could possibly believe that his utterances about budget surpluses could ever be taken seriously by the electorate he has spent several years trying to hoodwink.

Yet it seems some in the Labor Party really do credit the voting public with absolutely no intelligence whatsoever, and in what is obviously the opening shot in another attempt to waste years on another snake oil sales campaign, Swan has proven exactly that.

Readers should remember that of Labor’s many baseless promises since 2010, those that have detonated most violently in its face are those it deployed to stave off almost certain electoral defeat and to steal three additional years in office: the carbon tax promise, and the budget surplus promise.

The point is relevant because in the Fairfax interview with Swan, he was asked — directly — whether making spending cuts so close to an election might hurt the ALP politically.

”It’s not about them or us, it’s about the country,” Swan is quoted as responding.

The thing that makes me roll my eyes about this new timetable to deliver a budget surplus is that it is predicated on a) winning this year’s election, and b) the one due in 2016 as well, before the ALP would even have to be held to account for another “rolled gold” promise.

And far from it not being “about them or us,” as Swan so delicately puts it, it has everything to do with them or us — at least wherever Wayne Swan, Julia Gillard, and the Labor Party generally is concerned.

The present incarnation of the Australian Labor Party operates with an eye on politics to the exclusion of virtually all else — not electoral politics, mind, but the sort of politics designed specifically with Tony Abbott in mind and with an explicit ongoing obsession with trying to wrong-foot him taking precedence over all other issues of governance.

It’s one of the reasons the ALP finds itself in such a mess: it has spent so long trying to tear down a Liberal leader who is far more intelligent and resilient than its henchmen give Abbott credit for that this fatal misjudgement has come at the cost of effective governance in the orthodox sense.

Swan at least has the grace to concede that savage budget cuts, to be formally announced next week, will not be popular.

And the budget coincides with a rapid junking of other 2010 election commitments and sweeteners; the imposition of a levy to fund the NDIS was explicitly ruled out, and will now be added to the Medicare levy; and just this week, the ALP has abandoned further tax cuts announced as part of the compensation package for the carbon tax on the grounds that a falling carbon price means the tax won’t raise enough revenue to pay for the tax cuts.

It tends to ruin Labor’s hit-and-run attempts on Abbott for removing superannuation concessions for low-income earners meant to be paid for by the mining tax — on the basis the mining tax isn’t raising enough revenue to pay for them.

And it puts one hell of a dent in Labor’s campaign “scare” that in repealing the carbon tax, an Abbott government would also remove the compensation package attached to it: Labor has now announced it isn’t going to proceed with paying a hefty portion of those compensation monies in the first place.

Swan gets it half-right when he asserts that ”it’s certainly not a typical election budget…” but ruins his argument by adding the qualifier that the reason the budget is atypical is because ”you’ve got the sort of enormous complexity that we’re coping with here, but we’re going to get the settings right for the long term.”

Well, quite.

Clearly, the ALP is in no position to dole out largesse and pre-election pork, chiefly due to its own mismanagement of the national finances, irrespective of anything Swan might offer as an excuse.

And any voter tempted to be swayed by spending promises outlined by the government at any stage, from the budget next week until polling day on 14 September is, quite frankly, an idiot.

If there is one thing this government has proven beyond doubt, it is that any commitment received from it should be regarded as meaningless.

Yet Swan and his rationalisations continue; he talks of ”unprecedented and unforseen circumstances,” revenue shortfalls, the high Australian dollar, falling company profits and the parlous state of the economies of Australia’s trading partners.

Perhaps some honesty — the truth, the whole truth, and nothing but the truth, as I called it in this column the other night — would be a more palatable offering: tell the Australian public Labor got it wrong; that many of the government’s calls on economic policy, made in good faith, have proven erroneous; and as hard as it might be, an admission from the Treasurer that he, Wayne Swan, had made mistakes.

It wouldn’t fix the problem, and it wouldn’t win any votes.

But it might salvage a modicum of credibility and a sliver of respect, and the return from such candour might be that voters — armed with baseball bats and growing impatient of waiting on their verandahs for the ALP — would be a little less vengeful when the day of reckoning inevitably rolls around.

But no — such honesty isn’t the Labor way.

Instead, we have the self-important turd in the Treasurer’s office softening the country up for another tall tale about Labor and the coming budget surplus — in another four years.

And if anybody harboured lingering doubts over the credibility of this government, that renewing promise should dispel them once and for all.

Labor is prepared to say — and do — anything, and to hell with the consequences.

This latest development is another reason, in a long line of good reasons, why the ALP not only deserves to lose the election in September, but to lose it very badly indeed.

They never learn.

$22bn Deficit For 6 Months To December: Surplus? What Surplus?

GOVERNMENT FIGURES released today — at 5pm on a Friday — confirmed what everyone except the Gillard government already knew: far from narrowly missing a surplus this financial year, the federal budget is already in deficit to the tune of $22 billion in six months. So much for that.

Readers will recall that many months ago — confronted with bold reiterations from the government of an “iron-clad guarantee” of a budget surplus for the current financial year — I mused that I thought the result would more likely be a deficit of about $12-$15 billion instead.

It seems I was wrong; but then again, it was only recently that the disaster of the MRRT (mining tax) was fully spelt out for public consumption.

Far from being the $2 billion cash cow that would “spread the benefits of the resources boom,” it has turned out to be a $126 million red herring worth about $5 in revenue to the Commonwealth for every person who lives here.

In other words, well over 90% short of the revenue it was projected to generate.

With the federal deficit now set to top $40 billion for the fifth consecutive year, the figures lay bare the sheer incompetence of the pious, self-important worm in the Treasurer’s office and the credibility of any of his forecasts, figures or promises.

The whole issue of returning the Commonwealth budget to surplus — always a priority objective on the conservative side — has constantly and consistently been held up by Gillard and Swan — before the event — as the irrefutable proof of their credentials as economic managers, and of their superior claim as such over the Liberals.

Indeed, Swan has spent so much time in the national media excoriating Tony Abbott, shadow Treasurer Joe Hockey and shadow Finance minister Andrew Robb that if repetitive utterance really did create its own reality, Swan would be the Treasurer of the century.

He even had the temerity to send a mailout to his constituents recently, proclaiming the surplus had been achieved. What arrant nonsense!

To be frank — if brutal — it no longer matters whether any or all of the economic criticisms made of the Coalition team are valid, either in part or in full; the present government is so incompetent at managing money that literally anyone else would stand a better prospect of running an economic policy successfully in government.

And to be honest, given the mining tax, the carbon tax, cuts to various programs deemed to be “middle class welfare” and other smoke-and-mirror tactics designed to disguise the clawback of billions of dollars in recurrent expenditure have all resulted in a huge pot with little cash to fill it, it is clear that the present incarnation of the ALP can’t even get the one thing it historically excels at — taxing the hell out of anything that moves — right.

The empty government coffers are proof of it.

The surplus was non-negotiable; it was responsible and prudent economic management that Swan proclaimed he and Gillard would never shy away from; it was the right thing to do for the nation and for families. Or so he said — ad nauseum.

Today, it’s clear that a surplus of some $1 billion will actually be a deficit of $40-$45 billion; not only is everything Swan and Gillard bleated about a surplus now redundant, it is clear that under Swan’s stewardship, the budget hasn’t even moved in the direction of a surplus from last year’s deficit outcome at all.

It’s little wonder the figures were released, literally, five minutes before the start of the weekend; it’s indicative of just how little responsibility Swan is really prepared to take for the dismal economic numbers continuing to be racked up on his watch.

It’s little wonder, too, that the election will be out of the way before the full year numbers are released too: Abbott and the Liberals will make whoopee with today’s numbers, but it’s the stuff of Labor nightmares to contemplate what they could do with the annual result.

Tax-Free Threshold To Be Abolished: ALP

TWO SENIOR MINISTERS in Julia Gillard’s government dropped a bombshell today, with revelations the tax-free threshold on personal income is to be dumped; there is some dispute as to whether the measure is to be trimmed or abolished altogether, but the messages were in clear unison.

Here’s the good news: in case I have given any reader palpitations with this news, I apologise; the “revelations” to which I refer are nothing more than the latest insidious smear emanating from Labor circles in a desperate attempt to whip up fear over a change of government at this year’s election.

Shadow Finance minister Penny Wong issued a tweet on her official Twitter account this afternoon, stating that an Abbott government would “remove” the threshold, insinuating a rise in income tax for anyone earning less than $80,000 per year (and by extension, implying the poorest Australians would be, deliberately, hit the hardest).

In case anyone doesn’t believe it, here’s a screen shot I took of the offending tweet — I couldn’t believe it either. If the offending tweet disappears in coming hours, it’ll be pretty obvious why.

Wong Screendump

It was clearly the day’s strategy for the Labor Party, because shortly beforehand, pious self-important bubble and Treasurer Wayne Swan claimed on ABC radio that a Liberal government would scrap changes made to the threshold, which was tripled to $18,000 as part of the changes involved in the imposition of the carbon tax.

“Tony Abbott and Joe Hockey must come out immediately and rule out their devious tax increase for hard-working families,” Mr Swan said.

Hockey, very promptly, obliged.

I raise the issue of this latest instalment in the daily political grind because it offers up solid evidence, backed in writing and from the ministers in question, of the depths of dishonesty to which this government is apparently determined to stoop in the pursuit of the retention of government.

(The anti-misogynists in the ALP can have no objection to the matter being raised, either).

I’m not going to launch into a novel-length diatribe; I simply have to shake my head.

The Labor Party also has spent much the past week trying to score hits off two partially developed Coalition policies: the plan to build up to 100 dams around Australia, to floodproof  and droughtproof different parts of the country, and to create a new national foodbowl; and the idea to provide taxation and other incentives to increase population levels in the country’s (sparsely populated) north and west.

I would point out that the two policies — as the ALP well knows — are not complete, not costed, and have been released to the public in their present form only by virtue of leaks.

I’d also point out that the accompanying Labor Party howls about lack of costings deserve to fall on deaf ears; not only are the Coalition’s costings not finalised, they are not required to be finished for several months.

And as I opined of the latter of the two leaked policies many months ago, when it was a draft discussion paper written by shadow Finance minister Andrew Robb, the Coalition is to be lauded for at least coming up with positive policy ideas.

It would be refreshing to see the ALP come up with a policy initiative that doesn’t involve more and/or new taxes — not least given the embarrassing debacle over its mining tax, set to reap nearly 90% less than the government’s own projections forecast.

And it would be refreshing to see the ALP come up with spending initiatives that are funded by savings made elsewhere in the budget rather than requiring heavy offshore borrowing, such as the combined $18 billion bill for its National Disability Insurance Program and the so-called Gonski reforms in education.

As an aside, I would note that an unfunded commitment of $18 billion in spending — weighed against Labor’s own bleatings about Coalition costings — is little more than a classic case of a pot calling a kettle black.

To return to where I started, though — and nothing surprises or shocks me in politics after almost three decades’ detailed immersion in it — it does beggar belief that the present government is so desperate, or power-crazed, that it must resort to dishonesty of the most brazen kind, as has been evidenced today.

Readers know where I stand, but I’d like to think voters generally would find this sort of thing too odious to contemplate.

Politics and politicians have a terrible (and at times deserved) reputation and are held in the lowest of esteem at the best of times, but — to borrow a phrase from former Prime Minister Kevin Rudd — a government that must wilfully and systematically lie its way to an election (and back into office, if successful) is a bridge too far.

Such a government deserves to be thrown from office.

Oh, and here’s the bad news: in his radio interview with the ABC this morning, the bubble Treasurer was asked no fewer than four times whether he would raise income tax in the coming May budget; four times he dodged, and evaded, and obfuscated.

It was only during Question Time this afternoon — safely ensconced back in the House of Representatives, and under parliamentary privilege — that Swan finally, and belatedly, ruled a hike in income taxes out.

What he didn’t rule out, however, were rises in other taxes; and those, too, he failed to rule out increasing in his ABC interview this morning.

The Gillard government’s last budget may very well be its nastiest. Stay tuned.

 

 

The Puddle Of Urine Around Wayne Swan’s Shoes

The breaking news this afternoon that the Gillard government is abandoning its surplus commitment comes as no surprise whatsoever; I have been watching the live coverage of Wayne Swan on Sky News, and the self-important bubble looks so frightened I wonder if he’s wet himself.

This is a short post on account of the fact I’m busy for the rest of the day, but I will post again this evening, but whichever way you cut it today’s development was foreseen by everyone except the Treasurer himself.

It underlines how much political hot air has been expended by Gillard and her Treasurer in the face of what virtually everyone else — including this column — called, months ago, as a likely financial year deficit of between $12 and $15 billion.

And it vindicates shadow Treasurer Joe Hockey’s line that this government will never produce a balanced budget.

A $3.9 billion deterioration in corporate tax receipts is officially the pretext for the abandonment of the Labor pledge, and Swan says the government will revisit its forecasts early in 2013.

But the bird has flown — not just for this financial year, but for the life of the Labor government, given the likely drubbing facing the ALP at next year’s election.

And Swan knows it, and he knows this is a battering ram handed to the Coalition that will be ruthlessly used against Labor in the months ahead.

Further, it’s happened on one of the self-important bubble’s cherished stints on watch as the “Acting Prime Minister.”

No wonder he looks like he’s peed himself.

I’ll comment again later tonight.

Budget, Schmudget: Sleight-Of-Hand Swan Delivers Duplicitous Gillard Deception

”The deficit years of the global recession are over,” Treasurer Wayne Swan declared, in tonight delivering the federal budget for 2012-13. ”The surplus years are here.” And if you believe that, then at about 6am tomorrow you’ll be looking for the sun to rise in the west.

Wayne Swan tonight delivered a despicable and characteristically dishonest budget; those elements of it that aren’t completely false or motivated by a hatred of anyone who is not content to sit on their backsides and do nothing are simple exercises in deception.

I start with the headline “surplus” figure of $1.5 billion; anyone — anyone — who genuinely believes that the budget will be in surplus by $1.5 billion (or in surplus at all) is delusional, but that’s the amount of credit Swan and Julia Gillard give people for having any intelligence.

Remembering the current financial year (which is still going, incidentally) was forecast to end with a deficit of $20 billion — which has now blown out to $44 billion, with seven weeks left in the year for further deterioration — it beggars belief that Swan, who has never delivered a balanced budget in four previous attempts, would do so and by such a paper-thin margin on this occasion.

There is a lot of money being thrown around here; money being thrown at those people toward the bottom of the economic ladder. Some of these ideas have merit but most don’t, and meritorious or otherwise, the means Swan has used are questionable, the honesty of some of the initiatives dubious, and the end result being a massive attempt to hoodwink people.

Take, for example, the $2.1 billion being spent on a “schoolkids bonus” of $410 per year for primary school students and $820 for those in secondary school.

Julia Gillard even admitted during the week that this was a repackaging of a budget allocation that had existed for years; previously, parents had to claim this money with receipts, and Gillard said “about $100 million of that money” went unclaimed each year.

Yet here we are; the same money has been announced as a shiny new package designed to bolster the ALP’s education “credentials” and dupe people with kids into believing Labor is throwing a ton of money at assisting with their kids’ futures.

Or the 1% reduction in company tax — paid for by the mining tax — that was solemn ALP policy as recently as this morning, which has now been ditched in preference to a series of tax concessions, cash handouts and other bribes aimed at the working class, the disabled, and those reprobates who refuse to work for a living.

What makes this so outrageous is that Swan had the bare-faced nerve to blame Tony Abbott for the discarding of the business tax cut; saying that it was “impossible” to get legislation for the cut through Parliament in the face of opposition from the Liberal Party, Labor had “redirected (the funds) to families in a way that also helps the economy, including small business.”

The reality is that the ALP not only has the support of Independents and crossbenchers in the House of Representatives to deliver it a working majority, but it is in formal coalition with the Communist Party Greens, who refused to pass the enabling legislation in the Senate; my comment would be that if Gillard, Swan and the Labor Party can’t control their formal partners in government, then they shouldn’t be throwing stones at an opposition which is actually doing its job.

Of course, a lot of the money thrown around tonight comes from measures that have also been previously announced; that reviled carbon tax that is now seven weeks away is paying for billions and billions of dollars in “compensation” measures in the form of tax cuts, handouts, lump-sum payments and other bribes.

None of these have so far salved the wrath of public opinion Labor has endured since it broke the promise not to introduce a carbon tax, and there is no reason to believe they will do so now, having been re-announced tonight.

I was cautiously — cautiously — excited, to be honest, to see what the National Disability Insurance Scheme might look like, ahead of the delivery of this budget but again, I shake my head: with 400,000 people with permanent disabilities, $1 billion has been allocated over four years…and this will see 10,000 people able to access the scheme by July next year, rising to 20,000 by mid-2014.

And Swan had the audacity to point to this exact initiative as evidence his budget is “Labor to the bootstraps?” What about the other 95% of them? What a sham.

And at the other end of the spectrum — for people able to look after themselves without burdening the state, and probably with no desire to so burden it — Swan has doubled to 30% the superannuation contributions tax for those on incomes greater than $300,000 per year; never mind a progressive income tax system ensures these people pay their fair share — just keep hitting them.

If you ask me, someone on $300,000 per annum who wants to save for their superannuation ought to be encouraged, not penalised; but then again, this government has a visceral loathing of wealth, wealthy people or wealth generation, and will use any and all means possible to hit “the rich” in the nether regions.

Hell, this is the regime that believes households on $150,000 per annum are “rich!”

And can I just say that the move to reduce from 250 to 50 the number of cigarettes that may be brought into the country duty-free — far from being motivated by any inclination toward public health issues — is just a mean-spirited grab for a bit more cash, and simply removes an opportunity most people only get a couple of times if ever to get a cheap week’s cigarettes if they smoke (and yes, I do) — the other 51 weeks of the year, we pay our money (70% of which is tax) without complaint.

In a typically hypocritical move, 4000 public sector jobs are earmarked for the axe; so much for the ALP’s bleating about conservative state governments downsizing their own public service workforces. Swan blathered about every sector of every department needing to find savings; this one seems to be, to use a delicious phrase, a bridge too far.

Figures delivered tonight suggest some $33.6 billion dollars has been cut out of government expenditures for the coming financial year; my first instinct is to say — with an eye on the waste, the excessive borrowing, and the pissing of money up against posts in the last five years — that those savings had to be realised.

Look a little closer though, and so very much of that $33.6 billion is made up of deferred spending, programs being accounted for differently, figures being pulled from the coming financial year into the current one, and other one-off and/or creatively accounted measures that make the headline figure of $33.6 billion looks like it’s been on steroids.

The most worrying aspect of the expenditure cuts in this budget is that a huge slice of them — some $6-$7 billion, depending on who you speak to — has come directly from Australia’s defence budget.

Australia’s defence forces are woefully underfunded and under-resourced as it is; further, redundant military hardware — such as the basically useless Collins class submarines — is in urgent need of replacement.

Yet this government is content to give the appearance of balancing a budget — which it won’t — whilst pretending to throw money at all manner of interest groups in a pathetic attempt to buy them off, whilst leaving the country both dangerously exposed in terms of its defence capabilities, or unable to adequately respond to regional events that warrant an Australian military operation.

Happily, the budget freezes any growth in foreign aid; regrettably, it does not make swingeing cuts in what foreign aid monies are already expended. I’m happy for the government to send money abroad to help those in need when the country can afford to do so, but at present, quite clearly, it cannot.

The one initiative I am wholeheartedly in support of in tonight’s budget is the $515 million allocated to dental health; whether it is adequate as a first step remains to be seen, but in a system where taxpayers make compulsory contributions to a universal health care system, it should be just that — universal; and dental care has always been the glaring omission from the Medicare system.

This isn’t the budget I would have liked to have seen; it ignores areas in which I would have preferred to see some action, and addresses others that I feel miss the mark. But it is the 2012-13 budget we have, and it must be judged accordingly.

The bottom line is that whilst budget won’t do the country any good, it won’t do too much additional damage either, although foreign borrowings — $100 million per day for the last four years — will continue, even if at a slower rate. The budget will run the country deeper into the red, whilst attempting a fix of Labor’s fortunes that won’t work and trying to mollify various groups with cash that, in many cases, has always been available to them.

And to the extent that any of the money being thrown at people is new spending, can I just remind readers of their $900 cheque in 2008, paid for nothing more than collecting the mail?

Just remember in September 2013 — most likely after you have voted at the next federal election — that when the final outcome of the 2012-13 budget is published, and a deficit of at least $5-10 billion is shown, Wayne Swan will most likely have escaped any consequence for delivering such a dodgy and duplicitous budget tonight.

And unless there is an early federal election, Wayne Swan gets one more crack at this next year; and as horrified at the prospect of this as I am, it will be a morbidly fascinating exercise to watch him attempt to frame an election budget next May if tonight’s offering is the best he can do at present.

What do people think?

 

Just How Bad Is The Economic Situation In Australia?

It’s not a very scientific analysis, I know, but sometimes raw observations can be the most powerful. I spent an hour wandering around Westfield Southland tonight, and what I saw got me thinking about a whole slew of layman’s economic “indicators.”

For those who aren’t local, Southland is the second-largest shopping centre in Melbourne, after Chadstone (also in Melbourne); it is located in Cheltenham, about 14km south of the CBD, and is the eighth-largest shopping centre in Australia (Chadstone, incidentally, is the largest in the country).

I haven’t been to Southland on a Friday night for a couple of years; typically my visits there are on a Saturday to shop at Coles. But historically, a Friday night visit to Southland involves half an hour of looking for a car park, followed by the crush of making one’s way through the hordes of people who descend on the place for whatever reason at the end of the working week.

What I saw tonight was stunning.

The car park was, without exaggeration, half-full at most; even the undercover spaces, on a cold and squally Melbourne night, were easily snapped up — even the ones closest to the entry to the shopping mall itself.

Walking from one end of the centre to the other, then back again on a different level, I noticed not only how few people seemed to be around — not much of a surprise, given the state of the car park — but also how many shops were, at 7pm, either closed or closing: right at what should be the peak of the evening shopping rush.

Many of the shops that were open were placarded with sales and discounts for this and that…but I also noticed that quite a few retail spaces were vacant, and that quite a few others had turned over very recently — also a sign that business conditions aren’t the best.

And on the way back to my car, I stopped in at Coles to buy a packet of cigarettes, because I’d left mine at home; rather than queueing long enough to get nicotine withdrawal symptoms, I saw that not only were there only three checkouts open (in quite a big supermarket), but that nobody was queueing at any of them.

So Southland was a virtual ghost town; it says pretty clearly to me that people aren’t spending money because they’re at home, and if people aren’t spending money, it’s a telling pointer to the state of the economy.

And it got me to thinking about everything else that’s going on economically in Australia at present — and the picture isn’t pretty.

Official government figures from Treasury tell us that the economy is, indeed, growing; I have suspected for quite some time now that if the minerals and energy sector of the economy were to be excluded, then the remainder of the system would actually be in heavy recession.

So let’s look at some of the other indicators; you draw your own conclusions.

Job losses seem to be rocketing at present; between companies going into voluntary administration/receivership/liquidation, and companies simply sacking staff in the name of restructures and finding efficiencies, the stream of such stories in the media is now almost a multiple event on a daily basis — just like at the beginning of the 1991-1992 recession.

It’s true that some companies shedding staff do so for a reason; Qantas recently announced it would axe 400 maintenance jobs. But this was due to the retirement of old aircraft, whose replacements require little or no heavy maintenance, which has made those jobs redundant.

On the other hand, an exponentially greater number of businesses are simply failing; just today a Melbourne company called Brides of Melbourne went into receivership, with the loss of 16 jobs. Hundreds of customers are believed to be collectively at risk of losing hundreds of thousands of dollars in deposits, progress payments and even finished goods, to say nothing of hundreds of wedding plans that have probably been thrown into chaos as a result.

And anecdotally, just as these jobs are disappearing, it seems there isn’t a great deal around to replace them; a common complaint increasingly heard in social and business circles is that there isn’t a great deal of work on offer at present (which refers to the same type of work as people ordinarily do; of course there’s a lot of work to be found, but it’s often a different type of job and/or remunerated at a vastly inferior level).

Moving on, the residential property market is stagnant, and has been for some time; reports of house prices falling for the past year in most major markets seem to be just that: reports. First home buyers are still locked out of the market to a great extent, whilst intending vendors are sitting on their assets until they can realise greater capital growth from them.

The high Australian dollar is hurting a lot of businesses, and especially those reliant on imports; it has also cruelled domestic tourism and hospitality to a considerable degree, and that industry — which employs over a million people — is doing it tough.

Yet one of the things a high Australian dollar should redress is the price of fuel; as I have said before, the cost of oil is 40% below its 2008 peak, and the dollar is 10-15% higher than at the same time, yet petrol prices are equivalent to their all-time peak of four years ago.

The latest ACCC investigation into price collusion can be confidently expected to identify and rectify nothing; the ACCC’s investigations into the retail petroleum companies never do.

And living costs are higher than they have ever been; rocketing prices for gas, electricity, petrol and water are one thing, but they feed into the price of everything else we buy. Fuel especially — everything needs to be transported.

I was discussing the cost of living some time ago with some of my associates — all of whom, myself included, have travelled — and we concluded that it is now probably cheaper to live in the United Kingdom than it is in Australia when all of these factors are taken into account. And that is an indictment — a very heavy indictment.

Wage growth — which grew strongly in real terms from 2000 until the onset of the GFC in August 2008 — has stagnated, even falling in many industries.

Interest rate movements are a red herring, as it is estimated officially that only one in three Australian households have a mortgage; but to the extent they are a factor, banks increasing rates by more than an official movement on the way up, but reducing them by less than the official movement on the way down, strips more money from households on the dubious pretext of bridging shortfalls in “funding costs.”

And for those who do not own homes outright or have a mortgage, most rent; and residential rents have exploded in the past ten years to the point they have more than doubled, in real terms, in some areas of major capital and regional city markets.

Add to this a MRRT (the “mining tax”) which the Gillard government will shortly impose; whilst not denying the profitability of the mining sector, this means — in actual terms — that gross profit dollars that pay mine workers as highly as they do will begin to dry up; similarly, infrastructure spending by mining companies will contract, just to name a couple of examples.

Add to this a carbon tax of $23 per tonne from 1 July, levied on the “500 biggest polluters” as designated by an arm’s-length government agency; it doesn’t take an economics degree to understand that the more money withdrawn from a market system in the form of taxation means that less money will remain in that system to be otherwise used or deployed free of government interference, intervention of influence.

And it doesn’t take an economics degree to see what the coming federal budget will achieve, either.

Treasurer Wayne Swan is getting ready to rip $40 billion in recurrent spending out of the budget when he delivers it next week to achieve the paper surplus he is so obsessed with; pulling that amount of money out of the economy is only going to increase the financial strain on individuals, families, small businesses, and local communities.

I’m sure there are other “indicators” I haven’t included here — some of which I will no doubt think of as soon as I publish this article — please feel free to put them in your comments, folks, because this is a large discussion subject in which some points are going to be overlooked by some of us, and highlighted by others.

But I return to my opening point: just how bad is the economic situation in Australia?

I think it’s pretty bleak; in fact, I wouldn’t be at all surprised if we follow Europe into recession later this year.

Quite aside from the points I have covered here, there are other, more ominous warning signs. China has recently agreed to begin to appreciate its currency against those of its trading partners, whilst slowing its overall rate of economic growth; both movements have the potential to inflict horrendous damage on the Australian economy as China pays less in real terms for what it buys, and then begins to reduce the actual volumes of what it buys.

Europe and America remain large trading partners with Australia in their own right; yet Europe is heading back into the depths of severe recession, whilst the USA seems mired in economic growth so sluggish it barely makes a mark on that country’s manufacturing and employment figures, let alone increasing demands for goods and services from external markets like Australia.

And to cap it, the risk of military misadventure (North Korea, Iran etc) — were such an event to materialise — would be enough to send shock waves through already rattled world markets to which Australia is openly and highly exposed to.

Official figures are one thing (like inflation running at 1.6%, for example, because the price of cyclone-ravaged bananas is no longer a price pressure, and its removal masks the effects of a 25 cent per litre rise in the price of petrol), but reality is quite another matter altogether.

I don’t think the Australian economy is in very good shape at all, and I think that’s something that is likely to deteriorate in the next six to twelve months.

At some point, under the pressures in the system and the drain on those who sustain it monetarily — Australian consumers — something has to give.

I think the result is likely to be a fairly hefty recession.

Those are my thoughts; what do others think?