Howard and Costello’s Value Lost in Waste

The idea of utilising  cuts to the GST has risen its head as  a  potentially beneficial way to help stimulate economic growth and offset the downside of a budget deficit (Yep! Kev’s got to accept the nasty reality).   Surely the thought has crossed  Kevin’s mind.  In fact, I stumbled onto this idea on Peter Martin’s blogspot by pure accident.  The question raised is simple: Why not simply cut the GST?’

It’s an idea that’s occurred to Stephen Koukoulas of TD Securities:

“One very simply plan, which would not have a lasting impact on the Budget balance would be a 12 month cut in the GST to say 8%, perhaps lower. This injects money into the economy immediately, it is fairer in that is does not simply benefit borrowers; if implemented with a 12 month sunset clause, future budget balances would not be impacted and it could dampen inflation expectations. (There are issues of State financing, an effect on bringing forward spending with a hangover after that and the like, but these are small beer when policy makers are doing as much as possible to inspire economic growth.)”

Sound like a plan to me.

Also, I’m no expert on GST but I’m wondering exactly what value it really adds considering it’s supposed to be a value added tax.  So I went looking for a basic understanding and found a definition of sorts on Wikepedia

The GST (Goods and Services Tax) is a value added tax of 10% on most goods and services transactions in Australia.

It was introduced by the Howard Government on 1 July 2000, replacing the previous Federal wholesale sales tax system and designed to phase out a number of various State and Territory Government taxes, duties and levies such as banking taxes and stamp duty.

So, Howard stole the idea and introduced it in order to add value.  But what value?

Koukoulas continues…

“Howard and Costello’s Policy Failure

The current economy circumstances bring into focus the inept, short-sighted and hopelessly misguided handling of the economy in the final years of Howard and Costello government. In the period from about 2003 – 2004, Howard and Costello were continually surprised by the size of the budget surplus as the economy boomed on the back of a once in a century surge in national income from the staggering strength in commodity prices and remarkable growth in Australia’s major trading partners.

Instead of saving for a rainy day or building war chest of money for when this bubble burst (insert your own cliché!), they spent the windfall fiscal gains like drunken sailors, which fuelled a surge in inflation, which in turn caused the RBA to hike rates aggressively, which in turn is one reason why Australia is so vulnerable now to the global slow down. Right now, the near certain collapse of the terms of trade and the risk of a deep recession are not helped by this past profligacy.

These may be moot points at the moment, but there is a lesson for the Rudd and Swan government.

Had Howard and Costello managed the economy well and accumulated much of the windfall gain in large Budget surpluses in the period 2004 to 2007, inflation pressures would not have been as intense, the RBA would not have hiked as dramatically as the government would have somewhere between $50 billion and $75 billion is spare cash to support the economy at its time of need. Simply put, the government would now have greater flexibility to cut taxes and increase spending when the economy is cascading towards recession.

Thank God! Where’s the value added I ask, and frankly I can’t find it.  Well, not in the years that Howard and Costello had control of the purse strings anyway.

John Mc

103 Responses

  1. There certainly seems to be some room to manouvre.

    Solomon Lew calls for 50 per cent cut to GST,28124,24705683-5018019,00.html
    “MELBOURNE billionaire Solly Lew said the Federal Government has little choice but to go into deficit to stimulate the economy.

    The rag trade retailer also called on the Federal Government to slash GST by 50 per cent and reduce the excise on fuel.

    “By cutting the GST by 50 per cent and taking it down to 5 per cent, you immediately inject money into all industries,” Mr Lew said after his company’s – Premier Investments – annual general meeting in Melbourne today.

    .“The 50 per cent cut in GST will transform into savings. At the same time, the GST cut will accelerate demand and keep employment figures up.”

    He said the current retail conditions were the worst he has ever seen in his 45 years as a retailer.

    “From our perspective, it’s probably the worst conditions I’ve seen, with not a lot of confidence,” he said.

    Despite these dire conditions, Mr Lew said he was not dissuaded from opening between 30 to 40 clothing stores under the Just Group banner, which he acquired for $820 million two months ago.”

  2. Reduce fuel excise…where have I heard this before???

    What is the use as fuel is just on a dollar now and there is no reduction of anything because business will keep any increase in margins and the people pay for it.

    As far as reducing GST…that belongs to the states and that could cause a negative effect on their economies, or in the case of NSW…bankrupt it.

  3. Scaper

    “As far as reducing GST…that belongs to the states and that could cause a negative effect on their economies, or in the case of NSW…bankrupt it.”

    Excellent pick-up, NSW is already badly in need of a bail-out by the Federal Government.

  4. I just think that all of these “reduce GST” comments are easy to say but harder to implement. I guess they come out like the normal suggestions that oppositions that are intended to make the government of the day look bad (when they do nothing).

    From an IT perspective, sometimes it can be hard to apply a reduction like that quickly, and so the administrative overhead defeats the purpose.

    Then again – the UK govt has reduced the VAT level, so perhaps it will happen here too.

    But what is the effect for the average consumer? Will it cause them to increase spending?

  5. I do hope Neil of Sydney is reading this – puts a rather large hole in his argument, from a number of sources, that “everything good was ‘simply’ because of Howard & Custard…what other explanation could there be?”

    JMc (nice post BTW) I don’t think we need to go down this track just yet but it gives us a bit more to play with along with the RBA interest rate at the moment.

    I’m sure you are aware the Poms have just dropped their VAT from 17.5% to 15% so its not exactly an original idea…

    …I see the tabloids in Oz are making big about 6% unemployment next year – just a reminder that, that means 94% of employable people are at work!

    joni (4) yes it will cause consumers to spend more – prices will reduce (smart retailers will immediately have “massive” price reduction sales) – and I remind you that GST does have “multiplier effect” (although denied by governments) the chain…

  6. Stephen Koukoulas even uses the the word “profligacy” to describe the Howard government’s economic management. To quote Iron Chef “If I recall correctly” I was jumped on by the wingnuts for constantly using that word to describe Howard’s economic management.

    And it’s not as though you can blame Costello either, except for not standing up and doing something about it, because he also described Howard’s economic management with the word profligate, and flagged that Howard’s profligacy would cause future economic difficulties. The only ones who didn’t see the obvious looming and oft flagged difficulties were Howard and his sycophantic cronies because their short sightedness was firmly fixed on the next election and never beyond that.

    Look what Howard squandered, not just the opportunities in building this nation through skills, infrastructure, health and education (which the people were screaming out for) but by instilling, fostering and running a bloated and inefficient government bureaucracy, 22 billion dollar surpluses were just the start, he could have had 30+ billion dollar surpluses, and imagine what could have been done to position Australia with that?

    As much as Neil and the other wingnuts will scream about biased meeja and historians rewriting history, and as much as the right wing commentators attempt to put Howard up on a pedestal as the greatest leader we have had with four part documentaries spewing out pap about him, there is one definite thing history will say about Howard. His was a leadership that squandered a golden opportunity that luck had given to him.

  7. To claim that reducing the GST would “keep employment up” is to concede that the GST as is keeps employment down? (Thanks Johnny.)

  8. 7.

    “Unchain my heart”

    Howard’s first big tax payer funded multi-million dollar snow job campaign.

  9. LOL! Caney (I hadn’t thought about that – not sure it holds but clever outside the box thinking!)

    More of a tax on the poor and vulnerable, methinks!

  10. Guys, it’s the “tax adventure we had to have.”

  11. I think that you are right there scaper @2. Reduce the GST you are then reducing revenue to the states for things such as hospitals, schools and infrastructure.

  12. It seems that the NSW government have some money to spare as my pet company got ten million dollars to develop a project in the Hunter Valley.

    I’ve said before and I’ll say it again…if you have spare funds buy shares in this company as they will be worth at least a hundred times more in a decade.

  13. Congrats Scaper – I’m going to have a very close look.

  14. 22 billion dollar surpluses were just the start, he could have had 30+ billion dollar surpluses
    6. Adrian of Nowra | November 26, 2008 at 10:26 am

    Not sure if i agree with this. Economics is not science. You cannot reproduce the scenario. This is what you would like to believe sitting in your armchair. I highly doubt that if labor was in power they would have been running the surpluses that the Libs were. It is just wishful thinking on your behalf.

    If you recall Labor ran budget deficits of -12, -17, -17, -13 and -10 from 1991-1995. If Labor wasn’t thrown out in 1996 we would have had deficits budgets for many years.

    The Libs were elected in 1996 and their first budget was a deficit of -5 billion dollars. However their next budget in 1997 was a surplus of 1 billion dollars. So within a year and a half they had completely turned around the budget bottom line. There was no mining boom in 1997 and unemployment was still high.

    You believe what you want to believe. You have no proof that if Labor was in power from 1996 they would have done what the Libs did.

  15. Neil,

    You accuse Adrian of making armchair assumptions, and go straight on to make them yourself?!

    If Labor wasn’t thrown out in 1996 we would have had deficits budgets for many years.

  16. Hey Joni, I am interested in contributing a blog. Can I amail it to you? If so, what is your emial address?

  17. jon at tlc2 dot net

  18. Oh Neil you certainly like to live in a world where only a Liberal government can do good whilst ignoring every other fact around that.

    Just how did the Howard government achieve that surplus on an improving economy handed to them by Keating? a fact Howard himself stated. “I was handed a better economy by half than I would have thought possible”.

    So just exactly what did Howard do to turn around that deficit in 18 months?

  19. So just exactly what did Howard do to turn around that deficit in 18 months?
    18. Adrian of Nowra | November 26, 2008 at 7:24 pm

    I actually do not now. I was not interested in politics back then.

    Since there was no mining boom in 1997 and unemployment was still high i guess they must have made severe cuts to spending. Most probably got rid of a lot of people in the Public Service. But I am just guessing.

    But you can say what you like, but no economy improves that quickly.

    Furthermore I reckon Peter Martin is an idiot. Just another armchair critic.

  20. Thanks Joni. I have sent you the email.

  21. I’d hazard a guess that it was the effects of the Labor government’s massive economic reforms starting to kick in …

  22. Neil

    You fell for it hook, line and sinker my friend – the alleged deficit was nowhere near as nasty as claimed and then came the boom which further bolstered Howard and Costello’s egotistical rants.

    Rubbery figures shape black hole
    Australian Financial Review,
    June 27, 1996

    The $8 billion ‘black hole’ in the Budget has become the core of the government’s post-election rhetoric and the justification for dumping most of its election promises. As with the astrononomical variety , the discovery of the Budget black hole has been announced with confidence, but there is plenty of doubt over whether it actually exists. Again as with the astronomical variety, quite a bit of detective work is required.

    The position is made more complicated by the fact that there are two $8 billion holes. The first, which is uncontroversial, is the ‘underlying’ Budget deficit, net of asset sales, debt repayments by the States and the like, for the current financial year 1995-96. The ABS measure of the underlying deficit came in at almost exactly $8 billion in the 1995 Budget. This underlying deficit was acknowledged in the 1995 Budget Papers, though it was right at the back, and the Treasurer did not choose to mention it in his speech. The Treasury uses a slightly different measure, not reported in the 1995 Budget Papers, which was estimated at $6.7 billion in May 1995.

    Mr Costello’s March 1996 statement contains a modest adjustment to this figure. Labor’s policy decisions between the Budget and the election added a net $400 million to the deficit. Parameter revisions, that is changes in the projected levels of employment, prices, wages and other incomes, are projected to add another $2 billion, yielding an underlying deficit of $9 billion. Most analysts think this is a little too pessimistic and that the 1995-96 Budget will finally come in between $7 billion and $8 billion.

    But the 1995-96 deficit is of little more than historical interest. The financial year is virtually over, the taxes have been raised and the money spent. What matters is the deficit for 1996-97 and beyond. Here there is a gaping hole between the projections offered by Willis and Beazley in 1995 and those offered by Howard and Costello in 1996. In the 1995 Budget statement, Mr. Willis predicted that the 1996-97 Budget would be in surplus without taking account of asset sales. When State debt repayments are also deducted, the 1995 projection was for an underlying Budget deficit of $0.5 billion, close enough to a perfectly balanced Budget.

    Mr. Costello’s 1996 statement presents a very different picture. It projects an underlying Budget deficit of $7.6 billion for 1996-97. It is this figure, and the claimed need to get the Budget into surplus that justifies proposals to cut $8 billion from public expenditure, breaking large numbers of clear election undertakings in the process. So this is the $8 billion hole that really matters.

    As we have seen, only $0.4 bilion of the increased deficit can be traced to what Mr. Costello refers to as Labor’s ‘decisions and mismanagement’. The remainder of the difference, more than $6 billion, must be attributed to ‘deceit’ or, more prosaically to parameter revisions. Projected economic growth is revised from 3.75 to 3.25 per cent for 1996-97. The CPI is projected to rise by 4.75 rather than 4 per cent in 1995-96, after which projections are unchanged. Projected increases in average earnings are lower in 1995-96, but higher in 1996-97, leaving the outcome from 1996-97 onwards unchanged.

    A little arithmetic shows that something is fishy here. By the end of 1996-97, Mr. Costello’s estimate for Australia’s GDP is about 1 per cent lower than that put forward by Mr. Willis. 1 per cent of GDP is about $5 billion. Yet, as a result of this change, the Budget deficit is expected to blow out by $6 billion. If Mr. Costello is to be believed, a decline in growth will leave the government worse off, but the rest of the economy will actually be better off to the tune of $1 billion.

    Economists have a rule of thumb that a 1 per cent decline in GDP costs the government around $2 billion. This rule of thumb can be justified fairly easily. Tax revenue is about 25 per cent of GDP, so a 1 per cent (5 billion) decline in GDP will reduce revenue by around $1.25 billion. Employment will normally fall as well, and this implies an increase in benefit payments of around $0.75 billion.

    A more formal approach to this kind of problem is called ‘sensitivity analysis’ and the basis for such an analysis is presented in the 1995 Budget papers, showing the impact of a 1 per cent change in prices, employment and other variables on revenue and outlays. This more elaborate exercise confirms the result that the parameter revisions presented in Mr. Costello’s statement should not have changed the projected Budget outcome by any more than $2 billion.

    Where then, does the $6 billion come from ? Digging into Mr. Costello’s statement we find that in addition to lower growth, the deterioration is due to lower forecast growth in ‘certain incomes and prices’, not revealed in the aggregate parameters. Presumably the revised estimates must involve low growth in private sector incomes offset by high growth in the prices and wages paid by the government, while the original estimates must have had the opposite characteristics. Neither assumption has any obvious merit.

    To put it more bluntly, the most likely explanation is that the parameters were juggled in the 1995 Budget to generate a projected surplus and have been juggled in the 1996 Statement to make the deficit as big as possible. A surplus suited both Labor and the Coalition before the election, while a large deficit suits the government today. Despite some improvement’s over the past twenty years, Philip Lynch’s description of Budget estimates as ‘rubbery’ is still valid. If projections showing a surplus were needed for the government’s political purposes, they could be produced tomorrow.

    In summary, we can safely attribute most of the $8 billion Budget ‘black hole’ to deceit, but the responsibility for this deceit is shared between Mr. Costello and his predecessors. The Budget ‘crisis’ has been manufactured by the government to justify the abandonment of its electoral commitments.
    John Quiggin is Professor of Economics at James Cook University and author of Great Expectations: Microeconomic reform and Australia, published by Allen & Unwin.

  23. Howard did it by slashing and burning Neil, a slash and burn the likes of which hadn’t been seen in a long long time.

    He took Australia as one of the most generous in foreign aid in the world to one of the stingiest.

    He took us as one of the best R&D nations on the planet with almost monthly innovations coming out to one of the worst in the Western world where much of our research and development packed up and moved overseas,and then we bought back the developed products from a foreign company.

    He slashed education to the point it never recovered under a decade of his government even when he had unprecedented revenue to spend on it.

    He slashed investment in skills against all advice so down the track we ran into the worst skills shortage we’ve had, one that caused a large decline in productivity that negatively impacted on our economy.

    He butchered infrastructure with the same result as the previous paragraph.

    He mangled the government’s social obligations creating for the first time in Australia and American construct, the working poor.

    He reneged on many of his election spending promises, which became core and non-core.

    He short changed on many of his spending commitments, so much so Costello went to court to stop information on the governments underspending being released under FOI.

    His became the highest taxing government in our history.

    ….and so much more that he neglected, cut, slashed, reneged on or just plain ignored as was his want.

    Yet instead of shrinking government he bloated it so Canberra grew at an amazing rate with the number of people moving in to do government jobs.

    But what about his main 1996 election thrust with the large debt truck and the core promise he would slash the current account deficit, yet instead he bought in record deficit after record deficit directly because of his slash and burn policies on skills and infrastructure to get rid of government debt?

    That ineptitude and short sightedness has put us in a worse position now than we needed to be.

  24. My 2 cents on this one –
    the 2% cut in GST is a dumb idea. It will provide negligible relief, increase compliance cost in the short term and reduce the money available to Government to actually inject money into the economy to stimulate growth.

    This is a time when we need to stimulate growth. A cut in the GSt will have a negligible effect on this as the private sector will still be reluctant to invest in an uncertain economy. The Government on the other hand can and should inject money into the economy in ways that will encourage growth and hopefully also provide necessary services and future infrastructure. Reducing their capital to do so will hardly further this cause.

    Watch the opposition jump at this sort of thing because it increases the chance of a Deficit (Boo) because it reduces Government income. But from an economic POV, it won’t help a lot IMO.

  25. Also one of the Liberals’ first acts in government was to abolish the National Dental Scheme, leaving hundreds of thousands of people in pain with rotting teeth and no means to get treatment.

    … Leading to the situation where dentists from the Third World adopted Australia as a charity case …


    When a group of Thai Buddhist dentists feels compelled to come here to provide charity dental care for Australians, the true shame of our nation’s appalling public dental program is revealed.

    The Daily Telegraph, 16 February 2007,22049,21231326-5001031,00.html

  26. Howard did it by slashing and burning Neil, a slash and burn the likes of which hadn’t been seen in a long long time.
    23. Adrian of Nowra | November 26, 2008 at 8:29 pm

    Well you just admitted that it was not due to the mining boom. The initial budget surpluses were due to slashing and burning which you appear to disagree with.

    The Libs were faced with $96B of Federal government debt. Interest on this debt was $8,500 million dollars/year.

    Slashing and burning was the course of action they appear to have taken which you say has caused Australia many problems. It was the course the the Howard govt took. They will have to live with this on their conscience. From what i have seen I agree with what they did. It laid the foundation for paying of Federal govt debt and our future prosperity.

    We have saved $8,500 million dollars this year because we have no Federal govt debt. This money can now be spent on other things.

  27. Neil

    SMH’s Michael West revealed recently:

    In hock to the world
    Howard & Costello’s contribution

    When Peter Costello allowed the broadening of securitisation late in 2006 – in which the government allowed banks and brokers to include friends and family in mortgage documents as guarantors – this further enlarged the capacity for debt in the economy.

    It was aimed at encouraging the languishing supply side, which had seen banks’ home lending growth rates drop from 15% in 2005 to today’s 7%-8% growth.

    The true cost of funding swings on not just the RBA but interbank lending rates in the trans-Atlantic markets.

    Allowing greater competition was the cover story of deregulation.

    The real story was that huge flows of external money flooded Australia, artificially driving growth in our economy. This, at a time when the state and federal governments were telling us it was totally unacceptable for them to be carrying any debt.

    It took John Howard’s government 10 years just to pay off $30 billion and shift another $30 billion off the books, leaving us still with just under $30 billion.

    What Howard did was to pay out $30 billion, shift $30 billion off government books into NGOs and sell assets such as Telstra. With Telstra’s debts no longer on the books, that was a further $10 billion gone in one transaction. Its debt in 2008 is around $15 billion.

    The claim that we are debt-free comes from the fact that we are owed as much as we owe. If you have a million in the bank and owe a million are you debt-free? Or is that debt-neutral? And if you could see who we have lent money to – the Solomon Islands, East Timor and so forth – you would have to class the debts as unlikely to be recovered.

    I can say one thing about Howard and Costello they’re were all smoke and mirrors.

  28. 27. John McPhilbin | November 26, 2008 at 10:46 pm

    John I read your link but I must say i did not understand a single word. I will try and read it again on the train tomorrow.

    My understanding it that we have no Federal govt debt. But we have lots of private debt and the States also have some debt.

    “22 billion dollar surpluses were just the start, he could have had 30+ billion dollar surpluses, and imagine what could have been done to position Australia with that?
    6. Adrian of Nowra | November 26, 2008 at 10:26 am”

    Well if it is so easy to produce a 30 billion dollar surplus why didn’t Wayne Swan do it. The current financial crisis hadn’t started. You people from the left say the Howard govt was guilty of profligate spending. As far as I am concerned the Swan/Tanner budget proved you wrong.

    Why didn’t Tanner get up and say that we have cut this profiligate spending and that profligate spending and we have cut 10 billion dollars of profiligate spending and increased the 20 billion dollar surplus that we inhereted from Howard/Costello and increased it to 30 billion dollars.

    As far as I am concerned the Swan budget proved that you are all frauds. All I recall is that Labor was handed a budget surplus of $20B- they raised some taxes (Alcopos) cut some spending and produced a budget with a $20B surplus. Just like Costello handed them.

  29. OMD – I’m a fraud. HELP! How can I possibly ever vote against the Liberal party ever again.

    Unless, just unless – Neil maybe slightly exaggerating that we are all frauds.

  30. Gosh Neil, an extra 10 billion in less than 12 months. Just shows that Swan must be a far better Treasurer than Tip could ever be. All he could manage was 20 billion in boom times over nearly 10 years.

  31. Gosh Neil, an extra 10 billion in less than 12 months.
    30. jane | November 27, 2008 at 2:45 am

    You were the people complaining about reckless spending. Labor was in opposition for 11 years. They should have known exactly what the reckless spending was and cut it when they got into power.

    Since they didn’t do this, i assume that their was no reckless spending to cut. Costello paid off all the Federal govt debt and all you people claim is that he got lucky and labor would have done better if they were in power.

    A governments first budget is very important as it sets the tone for the rest of the term. Tanner had a chance to make the surplus bigger as Adrian and Peter Martin said Costello should have done and he didn’t. Labor was handed a $20B surplus and after months of work it ended up a $20B surplus (soon to disappear)

    Swans budget suggests to me that you are frauds

  32. Neil

    I was just looking at the budget papers from 2007/2008 and notice that there was still a “public debt interest” payment value of 3.5 Billion.

    I thought that Howard and Costello got rid of the debt totally and that we were not paying any interest. At least, that is the story you are trying to make out.

  33. I thought that Howard and Costello got rid of the debt totally and that we were not paying any interest. At least, that is the story you are trying to make out.
    32. joni | November 27, 2008 at 11:39 am

    O.K. I will look into it. Busy right now.

    But it is not the main story I am trying to make out. In the link you gave it says this

    “they spent the windfall fiscal gains like drunken sailors, which fuelled a surge in inflation”

    Actually inflation was 2.9% when the Libs lost office.

    If Howard was spending like a drunken sailor why didn’t Tanner get up on budget night and explode and reveal all this wasted spending. He could then announce a $30B surplus and brag that he saved $10B.

    Adrian and Peter Martin said it would have been easy to make a $30B surplus budget.

    Why then didn’t Swan/Tanner do it when they had the chance??? I think they cut 100 jobs at ANSTO, means tested the solar panel rebate. Not too sure what else they did.

    Perhaps there was no reckless spending.

  34. Interesting, Joni, have you got a link for that please.

  35. Neil

    I give Costello credit for getting rid of the debt. However he did this by selling off assets and creating a GST. Any fool can get rid of their debt by selling assets or introducing a new tax. It takes a much better skilled person to retain their assets while slowly reducing their debt.

    Howard did get lucky and most economists agree due to the emergence of China and India creating the mining boom.

    The thing is what did he do with that luck? He gave tax cut after tax cut and mostly to the top end of town and doled out one off bonuses to all and sundry to buy votes. Anyone with half a brain knows that if you reduce the tax take, that once the economy has a turn for the worse ( and they do this on a regular basis) then your revenue drops and you can no longer afford to run a surplus. Thing is the lkow paid workers are the ones sacked and therefore no tax paid. The rich CEOs are still employed and have benefitted from the tax cuts so the Govt gets less from the top end of town and none from the poor workers who lose their jobs.

    They built no hospitals, no dams, no infrastrucutre and had no visions other than to sell everything, pay out the debt and reduce taxes for the rich. They reduced and teeminated most apprenticeship schemes, reduced funding to TAFE and Universities.And don’t scream most of that these are state issues, nowhere does it prevent the Fedral Government of providing funds to build infrastructure for the future benefit of all its citizens in any state.

  36. Shane

    But the Howard government did not actually reduce tax. They were the highest taxing government ever (and I think from memory that is by the % of GDP not just in monetary terms).

    Smoke and mirrors.

  37. Smoke and mirrors. LOL – It was all smoke and mirrors. That’s why I despise politicians who claim to be economic genuises.

  38. For what it’s worth, the “D” word has now been spoken.

  39. I’m not sure what happened to my link, but I’ll try again.

  40. OK, last ditch effort. The report is in today’s OO. Cristian Kerr’s the author.

    joni: I fixed the link

  41. joni

    They did not reduce the overall tax take, however they did give massive tax cuts to the richest earners.

  42. For what it’s worth, the “D” word has now been spoken. (Jane).

    And it’s not a bad thing.

    From today’s Canberra Times: “Economists have welcomed Prime Minister Kevin Rudd’s concession yesterday that the global financial crisis could force the budget into a temporary deficit.”

    “Economists have been telling the Government it should use surpluses built up over recent years to protect the economy from the crisis, and to try to prevent it from sliding into recession, which would cause more damage than a budget deficit.”

    “Against the yardstick of what’s politically achievable, we survived a boom with solid surpluses, meaning we have the fiscal firepower that almost no other rich nation has.”

    “To leave that pretty asset sitting on the shelf under current circumstances would be a big mistake.”

    Naturally, Malcolm Turnbull had a pink fit, predicting a mess that only an incoming Liberal Government could fix.

    “Experience and history tell us that Labor deficits are never temporary. The last Labor deficit lasted for six years blah blah blah.”


  43. Any fool can get rid of their debt by selling assets or introducing a new tax.
    36. Shane | November 27, 2008 at 12:02 pm

    Well Keating couldn’t do it. Furthermore Labor sold Qantas and the Commonwealth Bank and debt just kept getting bigger and bigger and BIGGER. Any fool??? The facts don’t agree with your blind tribal beliefs.

    Also it looks like Costello’s initial surpluses were created by cutting spending not by increasing taxes and selling off assets.
    GST didn’t come until after the 1998 election.

    Looks like the surpluses were due to good economic management. Mining boom did not start until I think around 2002.

  44. Neil

    And what about the fact that we are still paying interest? I thought that Howard/Costello got rid of it all?

  45. Miglo,

    Also we’re getting the usual mixed nonsensical garbage coming out of the Liberals.

    One minute Julie Bishop’s foaming at the mouth saying that the Government doesn’t need to go into deficit, the next she’s saying the Government ought to bail out ABC Learning!

    Meanwhile not-so-avuncular fat arse Hockey is working himself into a lather declaring that the Government is becoming increasingly irrelevant!

    I guess the irony was lost on him….

  46. Joni #35

    Thanks for the link. 3.5 billion dollars per annum on public debt interest.

    What public debt??

    The Liberals keep saying they paid off the government debt.

    Please explain, Lieberals …

  47. Neil

    The final tranches of the CBA and QANTAS were sold of under Howard along with airports and anyhting else they could flog.

    KJeating couldn’t do it because he didn’t have a mining boom did he.

    The GST came in in after the 1998 election. HELLLOOOOOO they were in power from 1996 to 2007.

    HIs initial surpluses. Did you know that the budget went into deficit one year.

    Please provide details of the spending cuts that created the surpluses.

    Then again I suppose you can pay everything off when you build nothing in 12 years.

  48. Please provide details of the spending cuts that created the surpluses.
    48. Shane | November 27, 2008 at 1:56 pm

    See Adrians post number 23- not that i agree with everything he said. ((23. Adrian of Nowra | November 26, 2008 at 8:29 pm))

    “Then again I suppose you can pay everything off when you build nothing in 12 years.
    48. Shane | November 27, 2008 at 1:56 pm”

    Actually they built The Ghan railway. So your statement is wrong that they built nothing. It was the largest engineering project in 50 years.

    Futhermore you put to much faith in the mining boom for creating the surplus and our low unemployment rate. Its what you want to believe.

  49. Guys, The Government debt was only paid off in nett terms. We still owe money but other countries also owe us money and the quantum of the loans cancels out the net debt.

    BUT (and this one’s for Neil) most of our debts to other countries are low or no interest loans. Furthermore, a lot of it is to Sth Pacific nations who have little or no chance of paying it off. To say that we have paid off all Government debt is a bit of creative accounting. Accordingly, the net interest bill is still in the positive and hence Joni’s link above.

    A further point for Neil to take on board is that we are likely to go into debt for two reasons, the first is lower tax receipts duer to less taxes from income and company profits. The second is that Government spending should increase to stimulate the economy at a time when private investment is going down.

    That said, there is still the money in the infrastructure funds etc to spend before we have to dip into borrowings or bond sales. These funds, as the Libs pointed out yesterdaty, are largely made up of money from last fin years surplus which hadn’t been allocated (ie surplus from the last Costello Budget) so they aren’t contingent on the surplus budgeted from this fin year which will mostly be eaten up by reduced receipts and the 10Bn stimulus package. The infrastructure money, if spent, won’t affect the Budget bottom line. There is also the Future Fund which can be used creatively. It is possible that the Government could actually borrow from the future fund rather than other Governments or Bond sales and therefore help the future fund while avoiding net Government debt.

  50. Neil,

    Who built the Ghan? I think it was consortium of companies (Asia Pacific Transport Consortium ) that only got a little bit of the money from the federal government.

  51. Neil

    I don’t need to answer regarding the Ghan joni did it for me.

    By the way the rail link freight has failed and will be sold off under a mountain of debt.

  52. Neil
    I place too much faith in the mining boom. How about you look at the amount paid by mining companies to government coffers per year prior to 1996 and per year after 1996 if you seem to believe that the mining boom was not the major contributor.

  53. I place too much faith in the mining boom.
    53. Shane | November 27, 2008 at 2:30 pm

    I got this from Craig Emerson- Labors minister for Small business

    “But not all the fortunes of the financial services industry and the service economy as a whole are linked to the mining boom; far from it. A comparison of the contribution of the mining and the service economy to Australia’s GDP before and during the mining boom makes my point. In the year 2000, before the mining boom began, mining contributed 7.6 per cent of Australia’s GDP and the service economy contributed 63.2
    per cent of GDP. In 2007, mining contributed 6.8 per cent of GDP and the service economy 65.9 per cent of GDP. The service economy was by far the biggest contributor to Australian prosperity before the mining boom and remains so even when the price of minerals is so strong. In fact, the share of the service economy in the total economy has increased while mining’s relative share has actually fallen (owing to a run-
    down in oil production). ”

    I got the quote from this link

  54. How many of the service industries service miners and the mining industry. What percentage of the service industries income is sourced from mining by way of mining employees, development.

    Expenses the mining industry incur which go to other industries as income is also a result of the mining boom.

  55. The increase in the service industries was to cater for the increase in the mining industry. The two were directly related to the boom. Those industries that declined under Howard were manufacturing and industries that had no spin off from mining.

    Now take Australian oil production out of the equation and try to tell us that mining actually decreased in the last decade plus. That’s just looney.

  56. How many of the service industries service miners and the mining industry.
    55. Shane | November 27, 2008 at 3:35 pm

    Don’t know but according to Emmerson the mining boom didn’t start till at least 2000. Futhermore not many people are employed in mining. I remember the greens saying we have only 30,000 people mining coal. Number of people in the mining industry is around about 150,000. I believe this was about 80,000 before the boom. Not many people involved directly in mining. We have got lots of extra money since 2003. Not too sure if its created many extra jobs.

    But hey, keep up the wishful thinking because i suspect it is all you have.

  57. Howard stuffed our economy as Treasurer, and the only reasons complete disaster were avoided under his PMship were the Labor economic reforms of the 80s and 90s that made for a fit economy, and the mining boom that flooded his government coffers. Neither of which, it will be noted, had anything to do with the actions of him or his “team”.

  58. Howard stuffed our economy as Treasurer, and the only reasons complete disaster were avoided under his PMship were the Labor economic reforms of the 80s and 90s that made for a fit economy,
    58. Caney | November 27, 2008 at 3:44 pm

    Caney you will not believe this but i just looked out my window and guess what I saw??

    A pig just flew past my window.

  59. Neil

    Mining boom at 2000. So Howard had 7 years of mining boom of his 12 years in Govt. No wonder things were good for him.

    Not many people are employed in mining however they earn massive incomes in comparison to the average employee. If you think the mining boom did not contribute to the services industries look at the real estate in towns near mines. Look at the lending. Look at real estate prices in WA as a result of the boom, and which are now coming back as a result of the fall in commodity prices in the mining industry.

    If you cannot see that they are all related then it is you with wishful thinking.

  60. you will not believe this but i just looked out my window and guess what I saw??

    A pig just flew past my window.

    No doubt you live in a Liberal electorate.

  61. I think you’ll find that profitablity in the Mining industry increased dramatically in that period as well which means that the Government received substantially more tax from mining in 2007 as a % of GDP than it did in 1996. On the otherhand, margins on many items from the retail sector declined markedly over the same period meaning that the tax from the service sectors (financial sector excluded) diminished as a % of GDP over the same period.

    Conclusion, the Mining boom, while reasonably static as a % of GDP, actually accounted for a much higher proportion of tax revenue in 2007 than it did in 1996.

  62. Just a reminder that Howard-Costello ran a budget deficit in 2001-2002.

    I figure that the only thing saving them from running further deficits after that was the mining boom which came along at just the right time, and put 390 billion dollars into their hands.

  63. Mining boom at 2000.
    60. Shane | November 27, 2008 at 3:54 pm

    NO!!!! Emerson said 2000 was before the mining boom.

    No doubt you live in a Liberal electorate.
    61. Caney | November 27, 2008 at 3:56 pm

    Caney -as usual you are WRONG AGAIN

  64. Neil, can’t knock someone for making a calculated guess.

  65. Shane i read your link but not too sure what your point is. These are the budget deficits/surpluses from 1996-2006

    -5, 1, 4, 13, 6, -1, 7, 8, 14, 16, 14 billion dollars

    They had run 4 budget surpluses up to 2000. Seven if you say the mining boom started in 2003.

    The initial surpluses were due to spending cuts by the Howard govt. They produced a surplus budget within a year and a half of gaining office.

  66. From Alan Kohler, Business Spectator, my favourite economic commentator at the moment, tells it just like it is…

    …because Rudd and Swan have fumbled the politics of the financial crisis from the start, and because Turnbull and his team have maintained a kind of “talk to the hand” disciplined vacuousness, the Opposition has got itself into a position to benefit hugely when the deficit is eventually announced.

    No other political opposition in the world has managed to achieve this. In every other country, fiscal stimulus and widening deficits are seen as a necessary response to the crisis and a sign of a government that is doing something, with the opposition having to tag along.

    So congratulations, Malcolm, for being an economic idiot but a political genius.

    The article is here:

  67. Neil

    My point is the following paragraph

    “As we all knew at the time, Australia’s budget surpluses during the Howard government years were a function of the commodities boom”

  68. TB

    That is my link 🙂

  69. “As we all knew at the time, Australia’s budget surpluses during the Howard government years were a function of the commodities boom”
    69. Shane | November 27, 2008 at 5:14 pm

    Yes, but my point is that this is not true. Costello had 4 surplus budgets before the mining boom started (1, 4, 13 and 6 billion dollars)

  70. Neil
    1 + 4 + 13 + 6 – 5 = 19

    -1 + 7 + 8 + 14 + 16 + 14 = 58

  71. Neil

    These are using your figures which I have not checked.
    1 + 4 + 13 + 6 – 5 = 19

    -1 + 7 + 8 + 14 + 16 + 14 = 58

    A hell of a lot of difference to me actually 3.05 times the previous surpluses in total.

    A total of 39 billion difference during the commodities boom.

  72. 72. Shane | November 27, 2008 at 5:34 pm

    O.K. I didn’t say there was no increase in revenue from mining. Kohler said ALL the Costello surpluses were due to the mining boom. I showed that this was not true. Also if it started in 2003 rather than 2001 this would affect the numbers a little bit.

    Furthermore the govt got more revenue from falling unemployment. More jobs means less paid out in unemployment benefits and the govt gets more money from tax revenue. Also remember we had to pay $8.5B on the $96 on the govt debt back in 1996.

  73. Neil

    Because we have now have proof that Howard had budget deficits, I now expect that if the Rudd government does take the budget into deficit then you will not have any complaints?

    You see, sometimes governments – for the benefit of the country – make the decision to have deficits. Normally in time of economic turmoil from around the world.

    When times are good they pay off debt.

    The Liberal Party does it, the Labor Party does it. And I hope that that is what you do too.

  74. Neil

    I never commented on Govt debt and agree with you there. However most poeple who blindly support John Howard ( bearing in mind I voted for him twice) are blindly believing he and costello were the saviours when in fact the global economy and the emergence of China and India were as a result of the commodities boom.

    Budget surpluses prior to this were as a result of asset sales.

    What would have happened if the mining boom did not eventuate, because there was no more silverware to sell off.?

  75. Budget surpluses prior to this were as a result of asset sales.
    76. Shane | November 27, 2008 at 5:53 pm

    Don’t think this is true. See comment number 23 by Adrian.

    Howard/costello must have made a a lot of cuts to the budget in 96/97 to get it back into surplus within a year and a half.

    As for selling the Silverware, i think most of the sales went into the Future Fund

    How about just admitting the possibility that they may have been good economic managers. You don’t have to believe it but it may have been possible.

  76. “As for selling the Silverware, i think most of the sales went into the Future Fund”

    Yet again Neil demonstrates his complete ignorance of facts while trying to defend actions of which he admits ignorance.

    Neil, The Future Fund was set up in 2006 so would you like to explain how asset sales prior to that date (including the final sell off of Qantas (1996) and the 1st (1997) and 2nd (1999) tranches of Telstra, the airports selloff (1997/98)) were put into a fund that did not exist at the time?

  77. Neil

    Now we can get onto the topic of debt.

    In Feb 1996 John Howard said this:

    We now owe the rest of the world $180 billion. Nothing, my friends, symbolises absolutely and comprehensively more than that disgraceful figure the total failure of Labor’s economic management over the last 13 years

    By the time he left office the value was approaching $600 billion.

    What does that say about his time in office?

  78. A question was raised a few months back as whether our seeming economic strength (in comparison to countries such as the US and UK) was miracle or a mirage?

    My answer is simple, it’s a mirage.

    To quote Michael West:

    “The shape of the world economy has changed in the last 18 years. China has boomed.

    Although Australia’s GDP growth has historically tracked the US, this time we are in a particularly fortunate position of having a mining boom (although commodity prices have begun to come off sharply). And Government debt is not an issue.

    That said, Australia like the US is a current account deficit country (currently 6.2% of GDP) which means our banking system borrows from the rest of the world to support our lavish lifestyle.

    No longer can this country rely on a debt-funded spending spree to fuel a recovery. This is bad news for both the banks [business] and the consumer.”

    I know Howard and Costello laid claim to being the masters of the economy and interest rates but that is simply no longer a viable claim, and it never really was. They were simply riding a favourable economic wind.

    They were also front and center when it came to cheering Australian who took advantage of artificially low interest rates by taking on boatloads of debt. Nor did they monitor the lending practices of the financial sector, in spite, in spite of the obvious lending lunacy that was going on.

    Our banks assure us that we are in a stronger position than the US to cope with any fallout, I tend to be more skeptical. Our banks have surely been aided in earning record profits off the back of complex and risky debt arrangements with other lending institutions, businesses, and individuals in recent years? This has been a global issue, not just one relating to the US alone.

    Rewind back twelve months and I can still hear Howard repeating the same dangerous mantra “interest rates are lower and people can borrow more.”

    Howard said the heavier debt burden reflected rising affluence.

    “It is the case that people are buying ever more expensive houses, and they are doing that because of a number of factors,” the Prime Minister said. “One of them is that interest rates are lower and people can borrow more.”

    Yes, our hero was pushing a dangerous mantra indeed. In his opinion, it seemed as though a new era had arrived under his leadership.

    He then went on to say: “Debt levels are rising, but we are choosing to use the debt more productively to buy assets that traditionally rise in value, like shares and property.”

    At around the same time the Reserve Bank’s figures on household finances showed that assets were rising faster than debt (in spite of many Australian’s carrying record levels of debt). Households, they claimed had assets, including housing, superannuation and other investments, that are equal to eight times their annual income.

    Mark Davis, author of The Land of Plenty writes:

    “Australia’s ‘age of prosperity’, as Peter Costello calls it in his memoirs, has been underwritten by the mining boom (even as manufactured exports stagnated during his tenure) and massive increases in household debt (now more than $1 trillion – about the same as the annual national output), even as the government has wound down its own debt. The national debt has in effect been privatised while, at the same time, risk has been shifted away from government and business onto the shoulders of ordinary people, in the shape of long working hours, casualisation, and the sort of uncertainty that is written in the fact that Australians take the least holidays of any western nation.”

    It just doesn’t get anymore succinct and to the point than that. And it was the Howard Government that have left us in this precarious position.

    In fact it was reported just recently that our “economy is even more vulnerable to an economic downturn than the struggling US, leaving us facing the spectre of soaring unemployment, falling house prices and a long-drawn out economic slump.

  79. Good post, John.

    The pathetic Howardhuggers probably know in their heart of hearts (if they have one) that the Howard-Costello claims to economic genius are spin, smoke and mirrors. But they will never admit it – never ever – because without that perceived “strength”, what have the Liberals got?

    Very very little.

    And god do they hate that.

  80. Neil, The Future Fund was set up in 2006 so would you like to explain how asset sales prior to that date ……
    78. Pollytickedoff | November 27, 2008 at 6:26 pm

    O.K. i made a mistake. I meant to say “paying back govt debt or went into the Future fund.”

    So let me get this correct. You guys are saying the early Costello surpluses were due to asset sales. The latter surpluses were due to the mining boom.

    O.K. This is where i will admit ignorance. I just assumed that the early asset sales were used to pay off govt debt and were not included in the budget bottom line.

    The sales of T1 and T2 generated a lot of money back in I think 1997 and 1999. If these were included in the budget bottom line i would think the surplus would be massive. Either that or it saved the Howard govt from running a massive deficit.

    Does anyone know if sales T1 and T2 were included in the budget bottom line????? Same goes for the airport selloff and according to Polly the last little bit of Qantas.

    I would be surprised if T1 and T2 was part of the early costello surpluses

  81. And guess which business is really booming Caney?

    Business booms for debt collectors as financial crisis bites,26860,24714274-5015795,00.html
    * Repossessions are up as crisis hits home
    * Debt collectors say business is booming

    YOUNG working men in fast, expensive cars, commonly known as cashed-up bogans, are being forced to hand back their hotted-up utes and other possessions as the global financial crisis hits Australia’s most dynamic economy.

    A rise in the number of cars and homes being repossessed has resulted in a business boom for debt collectors, who are predicting even stronger growth after Christmas, The Australian reports.

    Phil Botsis, director of Perth debt collection agency AusDetect, said turnover had increased 40 per cent in the past six months compared to the same period last year.

    He said utes were one of the most popular cars he had repossessed and this was partly driven by men employed in the mines who were struggling financially because work had dried up.

    “A lot of people who work on the mines are suffering,” he said. “A lot of them have been laid off and a lot of those people did commit themselves to heavy debt simply because they were earning good money.”

    Last Saturday, Mr Botsis repossessed four utes. In one case, a man had gone into debt to the tune of $60,000 so he could purchase his much-loved car.

    “He was a simple worker and I asked him, `Why did you ever do this?’, and he said, `Because I wanted it’. He was a truck driver initially and then he lost his job.”

    Shane Taylor, WA general manager of car auctioneer Manheim Fowles, said business was up 100 per cent this year on repossessed cars compared to the previous year.

    Mr Taylor said utes were popular but he had also seen a big increase in the number of luxury cars.

    “Now we are getting cars in the top end — Ferraris, Porsches, hotted-up Fords,” he said.

    With more than 30 years’ experience in the debt collection business, Mr Botsis said he was busier now than he had been in the slump of the late 1980s.

    “This is definitely worse in my opinion. I see it grassroots, there’s more people being affected by what’s happening in the world in our little state.”

  82. Budget surpluses prior to this were as a result of asset sales.
    76. Shane | November 27, 2008 at 5:53 pm


    Are you sure this is correct??? Most of the Silverware went into paying off debt or into the Future Fund.

    If budget surpluses were due to asset sales we should have seen large budget surplus spikes when T1, T2 and T3 were sold.

    I suspect that Costello never put asset sales into the budget bottom line.

    Hence the initial surpluses were due to actions taken by the Howard govt

  83. Neil

    Sales of assets are included in the income figures. That is how they get a surplus. Its the same as companies. If they sell something it is listed as income. Then come expenses which includes paying off debt. After all income and all expenses is there a surplus or deficit.

    Sale of assets cannot go anywhere other than income.

  84. Sales of assets are included in the income figures.
    85. Shane | November 28, 2008 at 8:51 am

    Did a google search and found this statement by Costello.

    “The Commonwealth accounts do not include the proceeds of financial asset sales, such as Telstra, in the bottom line. They have not included the proceeds of financial asset sales in the bottom line since the defeat of the Labor Government in March 1996.”

    At this link

    Costello would be foolish to make a statement like this if it was not true.

    Furthermore Costello said that when Labor sold the Commonwealth Bank and Qantas, the income received was used as recurrent revenue. This means that labor did not use this money to pay off debt but used it to make the budget deficits smaller. And the budget deficits were still huge.

    If true, what a stupid politicial party the ALP is.

  85. Neil

    More than happy to agree if this is true, just looking things up as I am not particulalry partial to individuals sites.

    If it is true then government bugets and figures do not conform to the standard for private enterprise.

  86. This wouldn’t be the same Peter Costello who went to court to stop the public from finding out about how he was deliberately underspending on budgeted amounts whilst still claiming the full budget spend?

    Or when confronted by bracket creep he refused to release the figures under FOI and again went to court to stop the public knowing the real figures. High Court decides on FOI and conclusive certificates

    Wouldn’t be the same Peter Costello who set a new precedent for ministers being able to say anything they like but not disclose the information or data behind their statements as “not being in the public interest”. That one phrase did not have to be proved or tested, it was good enough for a minister to just claim it.

    That Peter Costello, and you believe he would not make statements without veracity, dream on.

  87. “I meant to say “paying back govt debt or went into the Future fund.'”

    LOL. Funny how many posters ‘meant to say’ something entirely different to what they DID say when pinged on their inaccuracies.

    Neil, you may be interested in this article (a few years old now) that explains part of the dodgy accounting in regards to asset sales. When Costello says asset sales have not been included in the budget bottom line this is only due to 1) The dodgy accounting for assets (ie they don’t account for the asset only the sale proceeds) and 2) if asset sale proceeds had not been used to offset debt the debt repayments would have had to come directly from the budget bottom line.

    You may also be interested in this one – also a few years old – that discusses the 2000 budget and how a surplus of $2.8b was ‘achieved’ by relying on $2.6b from the sale of mobile phone spectrum – sounds decidely like the proceeds of asset sales being included in the budget bottom line to me.

  88. I’ve been spaminated can someone rescue me please.

  89. Polly

    Rescued. And I am sure that Neil will respond with a “I don’t have time” answer. Like his response @ 33. Like how he will not respond to the $600 billion dollar debt that he left us with last year – you know the one that when Labor left office he said was ” the total failure of Labor’s economic management over the last 13 years”

    The thruth – as painful as it is for the liberals supporters – is that the management of the economy by the Howard government was all smoke and mirrors.

    I am again reminded of what Fred Dagg said about John Howard’s “honest John” moniker:

    An honest man is not a man who is honest; an honest man is a man who is dishonest but is quite honest about it. A man who hides his dishonesty, now he’d be a dishonest man. But disarming honesty about previous dishonesty is apparently OK. Of course the dishonesty in the first instance is annulled by the subsequent honesty and any reference back to it would be the act of a dishonest political point scorer.

  90. Polly I just love the last two paragraphs of that link, the first which flags what everyone now knows. Howard diverted money away from infrastructure spending and investing in people and took the money from asset sales, increased tax revenues, cuts to services and spending just so he could rack up large surpluses as a means of claiming good economic management.

    The justification of this diversion of national savings away from productive investment in infrastructure into financial speculation is built on an even bigger lie than the “black hole” – that there is a fiscal crisis looming as a result of the ageing population.

    This lie is only politically sustainable because of the Government’s mad accountancy that purports to show that paying off debt and creating opportunities for private financial speculation at the expense of public investment in physical and human capital is the hallmark of responsible economic management.

    Howard was not labelled “tricky” for no reason and his deceits knew no bounds.

  91. Neil, you may be interested in this article (a few years old now) that explains part of the dodgy accounting in regards to asset sales.
    89. Pollytickedoff | November 28, 2008 at 12:13 pm

    How about answering the question. I didn’t understand what Davidson was trying to say. Were asset sales put into the budget bottom line or not?? This is not a left/right wing thing. What we need is an accountant to answer this. Costello says they were not. It makes sense. When T1, T2 and T3 were sold there would have been three huge spikes in government income and therefore three huge surplus budgets.

    However the money Keating got from selling C. Bank and Qantas was included as revenue. I think this was the only time in Australian history where all the proceeds were used to pay wages, govt expenses etc. What a waste!!!!

    I liked your second link.

    “In the 1996 Budget, the newly-elected government slashed $19 billion in public spending,”

    So the first surplus budget was due to cutting spending, not asset sales or the mining boom.

    “With current job-vacancy data weak and the economy slowing, his estimate of unemployment at 6.25 per cent by June 2001 – down from the current 6.75 per cent – will be difficult to achieve”

    Not for Costello it wasn’t. He took it through 6%, then 5%.

  92. Neil:
    “With current job-vacancy data weak and the economy slowing, his estimate of unemployment at 6.25 per cent by June 2001 – down from the current 6.75 per cent – will be difficult to achieve”

    Not for Costello it wasn’t. He took it through 6%, then 5%.

    But he didn’t in 2001 which is what the article was pointing at. Infact it went back up in 2001-02 to 6.6%!OpenDocument

  93. “This is not a left/right wing thing. What we need is an accountant to answer this.”

    I am and I did. The first link I gave you explains it as simply as possible. Sorry if you don’t understand but there is no simpler way of putting it than his example of the homeowner.

    And no, it isn’t a left/right thing, but then I have never implied that it was, only corrected your previous factual error and have tried to provide some information of how the national accounts can be manipulated. It is about being aware of how they fiddle the figures. If you look you’ll probably find articles etc about how other governments have also accounted creatively to make their numbers look better than they really are.

    “Costello says they were not.”

    And the second link I gave you showed how in the 2000 budget Costello was shown to be less than truthful as the surplus of $2.8b was largely achieved by including an asset sale of $2.6b.

    “So the first surplus budget was due to cutting spending”

    Yes, unfortunately a lot of the spending they cut was long term productive expenditure not simply wasteful spending.

  94. Just how did Costello do that again Neil? I keep asking just what specific policies the government put in place to decrease the unemployment rate but you don’t answer, especially as has now been shown the Howard government didn’t in itself invest in people and infrastructure which generate jobs, except for bloating Canberra. Also unemployment figures are broken down by state and mostly attributed to states, so the Labor states must have done fantastically in this area.

    It also happens that June 2001 was when the ABS changed the way it defined unemployment, which changed the figures.

    Special Article – Duration of unemployment: recent definitional changes (Jun, 2001)

    Are you seeing a pattern emerging here with the Howard government yet Neil, where every attribute you attempt to paint in a glowing light for that bereft government has an underlying cause in deceit, misdirection, misinformation, luck other other factors that had nothing to do with anything the Howard government directly planned or implemented.

    Also the unemployment rate varied considerably state to state in June 2001 (with Tassie doing badly), but it failed to get below 6.25% in that year, as the national average unemployment figure for 2001 according to the official labour figures was 7.4%.

  95. Sorry if you don’t understand
    95. Pollytickedoff | November 28, 2008 at 2:21 pm

    Well I still don’t get it. Davidson just seems to be talking about the evils of selling govt assets. Not whether the assets were or were not in the budget bottom line.

    “It is about being aware of how they fiddle the figures.”

    I noticed you didn’t mention Telstra which would have been by far the bulk of the asset sales. So i take this to mean that Telstra sale was not included in any of the Costello surpluses.

    You mentioned that the mobile phone spectrum as an asset sale but was included as govt income. I did a google search and found Costello’s comment on this. Didn’t really understand what he was saying but it is at this link

    Costello doesn’t think its an asset sale

  96. “Well I still don’t get it.”

    Then no amount of explaining it to you will help. Not because you are incapable of understanding it, but because IMO you don’t really want to understand.

  97. Not because you are incapable of understanding it, but because IMO you don’t really want to understand.
    98. Pollytickedoff | November 28, 2008 at 5:13 pm

    Thanks for the abuse. This discussion got started because you leftoids told me that the initial Costello surpluses were due to asset sales. Costello says that asset sales since 1996 were never included in the budget bottom line. This must obviously be true for T1, T2 and T3.

    To say this wasn’t true you give me an example of mobile phone spectrum. You say you are an accountant so can can bamboozle me with science and I cannot argue.

    I would think it is dubious if a mobile phone spectrum is an asset. I would think that you would get some people saying this was an asset and some would say no.

    Costello says this

    “It’s a revenue to the Government from licensing a public asset.”

    I believe Costello and i do not believe you

  98. do hope Neil of Sydney is reading this – puts a rather large hole in his argument, from a number of sources
    5. TB Queensland | November 26, 2008 at 9:54 am

    Actually what it shows TB is that you are a fraud. Please tell me what reckless Howard govt spending that tanner/Swan/Rudd cut???

    I know they cut 100 jobs at ANSTO when they were handed a $20B surplus. One hundred people you do not give a stuff about.

    Instead of talking the talk how about walking the walk. Peter Martin says that Costello should have produced a $30B surplus instead of $20B.

    Well after 11 years in opposition and being elected in Nov 1997 please tell me what reckless govt spending was cut???

  99. “Well after 11 years in opposition and being elected in Nov 1997”

    Whoops- Actually i meant 2007.

    But everybody please tell me what reckless spending was cut. I would be really interested to know since this is what this thread is about.

  100. Shaun Carney, link text here , 29 November 2008

    The politics of the mid-’90s, in which the Coalition could cast itself as the great economic saviour, have grown very tired and most voters are looking for something else. That’s why they changed the government a little more than a year ago.

  101. Strewth!! Re number 102, please use this link to Shaun Carney’s article …

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