Australia set to unveil new budget and deficit forecast

Thrugelmir

What's the news Generali?

Australia's government is set to unveil its latest budget as it faces questions about its handling of the economy ahead of an election later this year.

Treasurer Wayne Swan will outline his spending plans, and is expected to say Australia will post its second budget deficit in three years.

Analysts expect a deficit of as much as 20bn Australian dollars (£13bn; $20bn) for the financial year 2013-14.

The economy has been affected by weaker global demand for commodities.

That has hurt Australia's growth and tax income.

http://www.bbc.co.uk/news/business-22520507

Generali

Thrugelmir wrote: »

What's the news Generali?



http://www.bbc.co.uk/news/business-22520507

It's not really news that Socialists live in LaLaLand.

Labor (not Labour) have consistently spent more than revenues. This Government has done it and the last Labor Government did it.

Revenues have been less than forecast because the revenue forecasts we ridiculous. Even now they are forecasting the price of carbon for the carbon tax will be $15/tonne. That is extremely unlikely when the EU price is $5 a tonne!

They brought in a mining tax that was going to bridge part of the shortfall. It was due to bring in $3,000,000,000. That was downgraded to $2,000,000,000. In the end a little over $100,000,000 was raised.

Bear in mind that a year ago, Wayne Swann stated in his 2012 budget that the Federal Government would be in surplus by 2013. That would be Labor's first surplus for almost quarter of a Century (FY 1989-90).

The problem isn't with the economy. We've got GDP growing and unemployment well below 6%. The problem is we've got the idiots in charge once again.

Kennyboy66

Generali wrote: »

The problem isn't with the economy. We've got GDP growing and unemployment well below 6%. The problem is we've got the idiots in charge once again.

Surely everything hangs on exports of coal and iron ore.

I thought growth in 2012 was 3.1% (and slowing) with mining contributing almost 1% of that.

With a budget deficit (after a huge boom), a currency that owes its strength to commodities prices (not unlike when sterling was a petro currency in the early 1980's), a housing boom that makes the UK look like Trumpton, household debt / income ratio that is higher than the US was before sub prime crisis blew up and the lack of obvious fiscal or monetary weapons in the face of a slowdown.

What could possibly go wrong ?

I'm already looking forward to being able to afford a holiday there in 3 or 4 years when its back to $2.2 to the £

Generali

Kennyboy66 wrote: »

Surely everything hangs on exports of coal and iron ore.

I thought growth in 2012 was 3.1% (and slowing) with mining contributing almost 1% of that.

To be fair, the real boom was in mining investment, not so much in commodities output. That investment will create jobs and exports (if not growth in GDP it will support GDP) for decades to come.

Kennyboy66 wrote: »

With a budget deficit (after a huge boom), a currency that owes its strength to commodities prices (not unlike when sterling was a petro currency in the early 1980's),

My argument is that partly the Aussie is strong because of what you say, often known by economists as 'the Dutch Disease' but also partly because interest rates have been extremely high in Aus compared to other AAA countries. A big part of the strong Aussie is Mrs Watanabe and the 'carry trade'.

Kennyboy66 wrote: »

a housing boom that makes the UK look like Trumpton, household debt / income ratio that is higher than the US was before sub prime crisis blew up and the lack of obvious fiscal or monetary weapons in the face of a slowdown.

There is a lot of debt and the bank sector is a concern of mine. The next obvious tax hike is getting rid of negative gearing and that would slash asset values in pretty short order. Aussie banks do have high reserves and clung to archaic ideas like wanting deposits from buyers and insisting on an MIG from low deposit buyers.

It's clear that Aussie housing is expensive and domestic banks heavily exposed to it. I won't pretend otherwise.

With 4 huge banks dominating the domestic market, all of which are in the top 11 banks in the world as defined by 'market cap', Australian banking almost defines too big to fail.

Kennyboy66 wrote: »

What could possibly go wrong ?

Nothing, we're the lucky country doncherno?

Kennyboy66 wrote: »

I'm already looking forward to being able to afford a holiday there in 3 or 4 years when its back to $2.2 to the £

I visited in 2003 when it was about £1=$3. I felt like a Saudi prince in 1975 London. I can recommend it highly. You can buy me a schooner when you come over in return for some tips of places to visit.:D

There are definite headwinds facing the Aussie economy. Those headwinds aren't really demonstrated by this deficit however as most of it really is on the spending side not on the revenue side. Revenue came in below expectations but the problem was with the expectations.

Labor blew out the budget again. It's what they do. 1 surplus in 25 years says it all.

grizzly1911

Generali wrote: »

I visited in 2003 when it was about £1=$3. I felt like a Saudi prince in 1975 London. I can recommend it highly. You can buy me a schooner when you come over in return for some tips of places to visit.:D

There are definite headwinds facing the Aussie economy. Those headwinds aren't really demonstrated by this deficit however as most of it really is on the spending side not on the revenue side. Revenue came in below expectations but the problem was with the expectations.

Labor blew out the budget again. It's what they do. 1 surplus in 25 years says it all.

I remember being able to go to Switzerland at 3CHF/£1.

What are they spending the money on?

Do any warm blooded "western style" democracies really run surpluses?

Generali

grizzly1911 wrote: »

What are they spending the money on?

A massive increase in welfare spending. Taking money from a few rich people and giving a few bucks each to a client group who will keep voting Labor.

pqrdef

Thrugelmir wrote: »

The economy has been affected by weaker global demand for commodities.

A mere blip then. Not something that's likely to last long.

We should have Australia's problems.

Thrugelmir

pqrdef wrote: »

A mere blip then. Not something that's likely to last long.

We should have Australia's problems.

High exchange rate appears to be impacting exports.

Rio Tinto Seeks to Sell Australia Coal Stakes

http://online.wsj.com/article/SB10001424127887323296504578399463110726302.html

grizzly1911

Generali wrote: »

A massive increase in welfare spending. Taking money from a few rich people and giving a few bucks each to a client group who will keep voting Labor.

What sort of things?

Generali

grizzly1911 wrote: »

What sort of things?

Big, unfunded, increases in the income tax free threshold
A new Disability Insurance Scheme (cost over $20bn, mostly unfunded)
Expensive education reforms, mostly aimed at paying teachers more (unfunded and there is a problem of unemployment among teachers in Aus as we have too many)
Big increases in the grant for buying second hand homes (subsequently reversed)
Big 'giveaways', literally handing cheques for hundreds of dollars to all.

There's plenty more too.

Generali

To be clear some things, especially the disability scheme, are highly laudable in themselves. The problem, as Mrs Thatcher nearly said, is that it wasn't enough for The Good Samaritan to have kind thoughts, he also needed to have the means to be able to help and Labor have blown huge sums of money.

They spent vast amounts on the physical fabric of schools in the name of stimulating the economy but a lot of what they built simply wasn't needed.

We got a small new block at the kids school but what it replaced was fine. This was just a waste of money. Over $16bn was spent (i.e. almost enough to pay for something sensible like helping disabled people) and over half was wasted. If you compare the cost of the building works in Victoria on state schools with the cost of similar works in independent schools where they are spending parents money, not cash from the money tree the Government overpaid by 55%. Add to that the superfluity of some, although not all, of the building and you have a huge amount of waste.

On top of that you have about a billion spent on giving kids laptops at a cost of something like $6,000 a machine!!!

Then there's the National Broadband Network. I like fast internet but providing it to every single shack in the middle of the Outback is flippin' crazy. People that live out bush have some disadvantages to living there, it's just the way it is. NBN is going to cost $43,000,000,000 at current estimates but there's no way it'll come in on budget and already there are the very predictable and demonstrable examples of price gouging by contractors.

It's this weird thing Labor do here. It's not even ideological because I could sort of forgive that. It would be cheaper for them to be in opposition setting fire to bank notes than in Parliament spending money.