The dollar's fall reveals a budget mess

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Don't you just love the way this country is currently swamped with experts who are all saying mining investment is going to end in 2015 ,yet not one of these expert's even saw the Global Financial Crisis coming ! Talk about dumb and dumber .In the meantime the scaremongering by so called expert economic commentator's continues 24 hours a day 7 days a week that this country's financal fortunes are all going to fall in a heap.
What a load of bollock's.This country has a oodles of resources ,is part of the Asia /Pacific region and only has a population of around 24 million people.This fearmongering that the country is suddenly going to to fall in an economic heap is absolute rubbish.
The problem this country DOES HAVE is an over reliance on resources for an income,but this country has shown time and time again it can overcome anything once it set's it's mind to it.
As for Tony Abbott's economic team recognising all the issues Robert Gottliebson,the Australian public is yet to hear one word about how the Liberal Party who encouraged the creation of $1Trillion in household/mortgage debt under the Howard government is going to fix this massive problem draining the life out every other sector in the Australian economy.
Robert Gottliebson's obvious talent for writing horror stories and top shelf economic fiction is mind boggling.

I clearly remember that when Treasurer Costello warned about financial storm clouds on the horizon (northern hemisphere crisis) and not a time to vote an experienced government out of office during the 2007 election campaign Opposition Leader Rudd and his colleagues mocked him and responded that he was an alarmist and to ignore his claim. Sadly too many journalists backed Rudd's ignorance.

I guess that's why he went on to reduce superannuation taxes, and throw away the mining windfall with one of the most profligate cash splashes in Australia's history. Talk about 'booby-trapping' the economy.

"a surge of confidence" Ah, animal spirits! Where is this "a surge of confidence" in austerity/Noalition-model Europe?

Australian economic history offers no support for the "crowding out" hypothesis, notwithstanding its popularity with the ideologues: private investment generally varied and prospered with public investment, not inversely to it. Throughout the nineteenth century public investment provided the people with urban and rural infrastructure at a remarkable rate: the years from 1860 to 1890 when public investment was highest as a proportion of all investment were the years when Australian income per head was among the highest in the world.

"Australia is forced to cut"? I thought deficits were forecast for the next four years!

A $19bn deficit this financial year will bring the total of Labor government deficits across five years to almost $192bn – but just consider what state the Australian economy would be in if Labor had forced surplus budgets. Nor, given Europe's experience, would the Noalition have done any better.

"poor management of Australian resource extraction"?

Self-serving, sanctimonious rear vision! If Labor had tried to force the sequencing of projects to minimise such problems, Robert and the whole business community would be screaming about sovereign risk and government interference. You would have ferociously opposed maximising social and economic benefit at the time, but now that the problems that you knew would happen have occurred, you want to blame someone else.

Let's not overlook wage and lifestyles pressures due to the deliberate importation of coolie sweatshop labour sought by all employers, not just Big Mining, and by all Laberal politicians. Both s457 visas and Labor's Enterprise Migration Agreements are designed to cut wages and discourage training, as then Resources and Energy Minister Martin Ferguson emphasised. As more than half the s457 immigrants go to Sydney and Melbourne, more than half the nett increase of 366,900 for 2010 and 2011 is directly competing with local job-seekers. No worries over those job clashes!

While any fall in our dollar is desirable, don't assume it will last. Both the U.S. and China have far greater problems than the financial casino chooses to recognise.

Looks like Phil Clarke is now masquerading as R Ambrose Raven; show thyself !

So, Stephen/Peter, you're one sad and shallow individual. Some of us discuss the issues, you, not being up to that, discuss the people who discuss the issues. Well, it is said that imitation - even imitation as feeble as Stephen/Peter's - is the sincerest form of flattery.

Enjoying flattery is a feeble imitation of a good sense of humour.

China's famous 'soft' landing was really a thump in disguise. True stats are emerging from those who hang on its coat tails. Could be a blessing in disguise for Australia, with economic diversification hopefully amply assisted by a thumping drop in the AUD. Those of us foreigners who have suffered from buying an exorbitant AUD in the last two years finally get some relief. Australians will learn to appreciate the true value of an imported SUV,although the yen's playing the same game.

- Reference to historical economics in 19th century horse and cart days – in respect of private and public expenditure working a charm on per capita income based at a time when population was between 1.5 M and 3.66 M (1858- 1898) in the newly founded colonies - is well unhelpful to say the least. And I’m fairly sure the 300,000 to 1 million Aboriginals living here before Europeans were not counted in the per capita example. Anyway.

- Robert stated that we now have to cut when we should be spending - but we’ve got no fuel in the tank to do so. Disabilities and education will not assist economic growth in the short term.

- Oh yes and while we are at it on “education policy for the future” ripping money out of universities was not a super smart move by Labor. That’s the dumb down right there.

- If Labor had forced surplus budgets - the Australian economy could well be based on lower costs now with higher growth on the horizon.

- Lets face it if Labor couldn't even sequence a pink batts roll out, nor a chook raffle at the pub - so it had no chance of organising the sequence of mining projects. But I doubt whether sequencing was the point being made. But Labor could have done more to streamline approvals, creating certainty while still managing environment. It could have been more proactive in its entire approach and support. Labor could have implemented more reform of the economy, cut red tape, and have provided encouragement and assistance to business. But instead it chose to pick a fight.

- And what is your idea of maximising social and economic benefit? I suspect that means grabbing more from business to pay for recurrent expenditure on social programs – raising expectation and damaging the future economy when money and investment doesn’t live here any more. Talk about dumbing down.

- 457’s – go on - have ago – but this is absolute desperation - unmitigated rubbish. What is real is the need for Australia to get up - restructure, reform and compete because whether you or I like it or not - Asia via the internet is coming big time. Outsource everything because it’s too expensive here. Get ready.

- So blame everyone else (employers, miners and Liberals) but not Labor. Good luck with that – because the majority are not with you at all.

But of course you know better right?

Confirm above was posted in response to comments by R. Ambrose Raven, Thu, 2013-05-16 09:36

"Because of the mistakes made by the Gillard-Rudd governments and poor management of Australian resource extraction we have become one of the highest cost mineral producers in the world. Combine high capital and operating costs with long-term lower prices and you have a tough time for corporate taxation revenue." The biggest error by Labor is being affiliated with aggressive unions, they have put Australia in this position. No surprise that the US is surging ahead, Australian business have to deal with ten times the industrial disputes that the US have to suffer.

As for Andrew, the only real generator of income at the moment is our resources, and yes we do have oodles as you say, but if countries can buy cheaper elsewhere, they will. I get the impression some of you lefties think Australia is the only resource rich country in the world, well far from it. Others appear to have this notion that countries will always buy from us because we are Australia, the lucky country.

Now I agree, there appears to be too much reliance on our resources, problem is our tourism industry is flat, manufacturing industry almost non existent, export market struggling, due in part to the high AUD, but also costs and red tape inflicted under Australia's industrial laws. And our retailers are struggling because it's cheaper to buy overseas, including shipping costs. And if they get their own way and GST is added, it will still be cheaper.

While we have a government, that is actually governed by the unions, nothing will change. Robert is correct is saying a flood of confidence will return if the Coalition win the upcoming election with a handy mandate. The Coalition is not controlled by unions and the bigger the mandate, the quicker they will remove these shackles holding back business growth, and take pressure off the resource sector.

I also agree with his comment that we should be spending, not cutting. We probably could have been, if Swan hadn't been talking up this fictitious economy, hiding the real economy behind smoke and mirrors. His fiddling with last years budget made it impossible to hide this time, and now the world knows, and this scepticism in Swan economic management is seeing the AUD devalue.

The simple fact is whether you believe Abbott and Hockey understand and recognise what has to be done, they are the only ones in a position to do it. Labor can't while the unions hold court.

Colin, I agree re unions. Labor supports unions, as they should, but one must remember that unions are only beneficial while they are doing what they are there for, looking after the workers. Once they step over that line, as they continue to do so, they need to be pulled back. Hawke did it with the BLF in the 80's and gillard has to do it now. she won't, too dependent on their backing, even though some of them are making ridiculous demands.
To be a good leader you must not be beholden to others and be strong enough to steer your own ship. Unfortunately, at this present time, we don't have such a leader. :o)

"Australia is forced to cut at a time when ideally it should be spending. And in purely economic terms, to be funding more payments to disabilities and education when you are getting into trouble makes no sense."

payments to disabilities and education is not spending ? or is it because "the wrong type" is benefiting which is why it makes no sense to u? Distribution which benefits the rich always make sense. To be human, one must have a heart.

The reality is that Swan has fooled all and sundry for five years with budget deficits, year after year, accumulating to close to $200 billion and $300 billion debt, also allowed the NBN to be undertaken off budget. If he was a CFO in the business world he would have have been sacked at the end of his first lolly pop.

The country is faced with three major financial obstacles namely, NBN, NDIS & Gonski which will hinder any incoming administration from providing us with a comfortable living.

Rudd and Gillard dabbled in education reforms, medical services which includes the disabled and other services for two terms in office and instead of gold at the end of the rainbow, we are rewarded with shambles.

Hi Robert, The more you write like this the more you diminishing your stature. Look at the overall economic settings, tell the public what they are wrong, don't kick people when they are down, it's not a good journalist. Since when that a government is responsible for a project cost rather than the management of the company? Beside, when when the commodity prices are trending down, why a country wants to develop more mines? Please write impartially and do proper analysis of each side policies and performance.

The people who now blame Costello for the superannuation settings forget that it was Paul Keatings who introduced high tax deductible contribution limits and indexed them .Costello simplified and marginally reduced the limits reached via indexation of the Keating settings.True Costello reduced the very slight amount of tax most superannuants were paying.But the complexity of super payouts with various nil taxed and nominally taxed elements mixed with the fact that retired recipients had zero and low tax thresholds meant that in reality tax on superannuation pensions was neglegible.Those who choose to blame Costello have not researched the facts.

Well look what's happened in France in just a year - why are we all so surprised by what's been done here by the Socialists?
Just do the right thing on "Clean-up Australia day" on September 14th.

So increased labour force participation through NDIS will be a bad thing? Preventing disadvantage in education is a bad thing for future economic performance? Really you should have been asking why it wasn't done sooner instead of pushing the discredited Austerian line. The consistent failure of business commentators and business lobbyists is to separate their ideological predilections (=personal political preferences) from their analysis and operation.

I love the criticism of 'the Unions' from certain posters, when what they mean is blue-collar Unions. All the professional bodies from the Superannuation industry to the Health professions are working to ensure their members protected positions and multi six figure salaries are maintained, yet its the simplistic argument against 'the Unions' that get recycled. Unless the professions and business leaders can provide an example in realistic pay expectations, why should PAYG wage-earners be expected to lose the benefits of penalty rates and workplace benefits.

Nice one, John. Like the AMA (Australian Medical Association), for example? A union, like so many others, just by another name....

Paul, no to both of your questions. Well may you ask why it wasnt done sooner. Instead of posting out $900 cheques to all and sundry along with building school halls that in many cases were not needed, the money could have gone into these areas, whilst there was money on the table. The cupboard is now bare.

Absolutely correct Alan,
Gerry Harvey loved it though, flat screen TVs' anyone, our national debt is not quite high enough.

Also how does my uncle , who has lived in NZ for close to thirty years receive a check from the Australian Government.

Whats' that slogan, " It's time"

Rober tyou state that "Tony Abbott is instituting a fast-tracked infrastructure program..."
Do have any detail on this? On the contrary, for example, he has declared he won't invest in urban rail projects, so what might this fast-tracked infrastructure be?

Thanks Robert, its all happening. All those wise sages, our there in cyber conversation land, stating that this is a "new pardigm", no one saw it coming. What rubbish.

Read some of my posts 12-18 months ago, you will see that, they were stating, that the AUD would kill the mining boom. They also stated that the over production of iron ore was childish. The transfer of massive capital from the east coast, to the west coast, would end in disaster. Foreign borrowing, would keep our dollar high (based on resources) and Australian profits low. That the iron ore era, would be replaced with the carbon fiber era. That the USD would rise due to improved terms of trade, due to US shale. That Europe was a basket case, pulling the US and China down, because of their alternative energy production. The RBA were fools because they were using monetary policy, to substitute, for rational fiscal policy. The RBA was destroying capital and not accepting that inflation could be rampant if the AUD broke out of its trading range.

Yep, there are more than 1000 posts stating that. There also dozens (of posts), talking about Australias, ludicrous energy policy and how climate change could be reversed by using carbon electrons, collected via liquid CO2 (Einsteins superconductivity).

So, the answer is, I dont give a rats what the Treasurer or Penny Wong or Treasury say, my posts said what was relevant, but they did not listen.

WOW, now as well as the journalists the economists are telling us who to vote for! Abbott has had 3 years to prove himself and the best he can still offer is to kick down the sandcastles others have built - he is no saviour, he's the political anti-christ. As for economic buffoons, look no further than a few journos and their editors doing their masters' bidding!

Divide and conquer is the motto of the current regime. I would love to see a harmonious, country, where we all settle down and talk to each other.

However when you watch a treasurer look you in the eyes and explain why revenues have evaporated into thin air. You realise that he is calling you a fool. It is just a lie to say that revenues have not risen. (up 7% this year). Australia has grown for 21 years, so, where is the revenue decline?

I am not a political person but I don't like to be treated like a fool.

A lower dollar is a sign of weakness. Look at the share market, it has fallen continuously for 3 days in tandem with the fall in our currency. A weaker currency is only good if have something desirable to sell (like Japan and US)..Our resources is not hot at the moment because China has cooled its economy at present time.

Good point Graham and Ian, but never the less our super average weekly payments at retirement will be on average $192(see link for calculation) and many people, in the 85% concerned, and one third of voters are thinking about it, …see
http://members.iinet.net.au/~gfh/gfhws/gfhsenior/images/Super_in_Austral...

will like to do a bit of work if only to pay for medicals,

….this work related income should be added to the age pension payment for Tax purpose and the ATO like anyone else but not deducted at 50% from the age pension, both sides of politics have lost the plot and wont get my vote, unless they do something serious about a measure that would add hands and skills to the market and pay for itself, vision and revenue side (not tax).
Our current crop of politicians strategies and planning skills : ZEROooooooooooooooooooooes.

"….this work related income should be added to the age pension payment for Tax purpose and the ATO like anyone else but not deducted at 50% from the age pension "
Good point Francois.