Guest Post: Winston Smith’s AOFM Charts

Winston Smith has been collecting data from the Australian Office of Financial Management as to Australian government debt. This is the latest position

Total Commonwealth Government Securities on Issue – $211,392m consisting of:
Treasury Bonds – $181,793m
Treasury Indexed Bonds – $14,379m
Treasury Notes – $15,200m
Other Securities – $20m
As at 7 October 2011
This is $8 Billion over the last four weeks. Where the hell is it going? This is getting scary as shit.

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56 Responses to Guest Post: Winston Smith’s AOFM Charts

  1. Skuter

    This is scary, predominantly because Howard and Costello used, from memory, proceeds worth about $60 billion worth of asset sales to retire the Hawke and Keating debt. I know the borrowing today needs to be adjusted for inflation, but still, considering how difficult it was to pay down the $96 billion, I wonder how this debt will ever be repaid.
    Added to this is the funding method for the NBN. The equity injections are being funded primarily by borrowings. As far as I understand, this will increase net debt. Perhaps the rollout is being ramped up? I’m not sure what else explains it?

  2. Louis Hissink

    Sinclair,

    Helps to study this book.

    The carbon tax is part of it as well – it is effectively taxing the air we breathe, and will be ultimately the intermediary item of exchange once they destroy the dollar by inflating it.

  3. JamesK

    “Address not Found” on your hyperlink, Louis

  4. “Where the hell is it going?” Its going to hit the permanent debt ceiling of $250 billion (raised due to ‘special circumstances’ to $200 billion in the last budget), on or around 1 Feb 2012.

  5. Louis Hissink

    JamesK, Whoops this is the right one – I forgot to add all the dubyas 🙂 My apologies

  6. JC

    I’ll tell what’s gone on. Tax receipts have possibly fallen materially while spending continues goes through the tax receipts like a pac man. Therefore they need to issue more bonds to keep it going.

    This is why they need the two taxes they’re pushing like crazy.

    Perhaps there’s also the off balance sheet NBN that is also impacting.

    Don’t forget they raided some lock boxed funds recently, which shows they needed the money.

  7. Louis Hissink

    Mind you I could be accused of being a little conspiratorial so if we take note of Sinclair’s experience with a journalist who believed all the conservative journalists were rednecked south Africans, Ann Summer’s error riddled profile of Bolt, and the equally erroneous biography of Tony Abbott that Gerard Henderson savaged, this suggests that the left are either cunning as toilet rats or are just plain stupid. I lean to the plain stupid situation and hence this debt isn’t some sneaky way of debasing our currency but simply stupid policies of economic illiterates.

    Zygmund Dobbs’ book on Keynes suggests that we might have plain stupid toilet rats who actually believe that their utopia is possible.

    That is also as scary as shit.

  8. amcoz

    Louis, I totally concur with your summary of the guv(wo)min’s ‘plain stupid situation’.

    The whole thing disturbs my psyche no end as it reminds me of the nightmare left by Gough’s gits back in the seventies, which took a generation to correct all their rabid policies and wasteful ‘spends’.

  9. TerjeP

    They need to achieve a surplus just to begin a reversal. However I can’t see them achieving a surplus any time soon let alone sustaining a string of them sufficient to pay down that monster.

  10. Ralph Buttigieg

    This is scary, predominantly because Howard and Costello used, from memory, proceeds worth about $60 billion worth of asset sales to retire the Hawke and Keating debt. I know the borrowing today needs to be adjusted for inflation, but still, considering how difficult it was to pay down the $96 billion, I wonder how this debt will ever be repaid.

    What to sell this time? Australia Post? Medibank? Centrelink?

  11. johno

    What to sell this time? Australia Post? Medibank? Centrelink?

    Yes to all of the above and then more. The NBN should be added to the list. (Should never have been taxpayer funded.)

    Hopefully the States will get into the act and divest themselves of schools and hospitals.

  12. Entropy

    I have never understood why the opposition, whenever it is referring to forward projections of government debt, include the cost of the NBN. Let the government try to explain why it should not be counted.

  13. Entropy

    Oops, do not include projections of public debt.

  14. I think JC’s broadly correct. The economy is slowing, and tax receipts with it. Meanwhile Wayne and Julia’s fiscal incontinence continues – they really do need those new taxes!

    Table Table E1 at this site shows the commonwealth government’s monthly operating balance, which is currently registering a deficit of 4% of GDP. And although it had stabilised last I checked there was no sign of movement back to balance, let alone surplus. And I’m suspicious as to why it hasn’t been updated since May …

    This mob really are nothing but empty words and hollow promises. Not only that, it looks like we’ll have ‘Spend-a-thon Kev’ back soon, too.

  15. Winston Smith

    Wow!
    I got posted!
    Thanks Sinclair, the line graph looks much better.

  16. Sigh. They need revenue or spending cuts, not revenue-reducing, economy-killing taxes.

  17. Winston Smith

    Johnno, here’s the excuse to sell their ABC!
    And if that happens, i.e. TA sells one of the Lefts icons, maybe they’ll think next time they get into government, of the consequences of profligacy.

  18. Skuter

    Clive from CS, it appears that the department of finance hasn’t produced monthly statements since the May figures (released in July). This seems a bit odd to me too.
    I think one problem that we are facing is that company tax has never really recovered post GFC, as anticipated by Treasury and now we are facing another slowdown. Also, I just checked the final budget outcome. It appears that while the underlying cash balance improved by virtue of a decrease in payments that exceeded the small decrease in receipts. However the fiscal balance deteriorated as receipts fell and expenses rose…From what I can tell, the deterioration reflected in the fiscal balance will have an impact on the underlying cash balance in 2011-12/2012-13. It is going to be tough for them to make that surplus in 2012-13…

  19. TerjeP

    I agree the ABC should be sold. However I doubt it would put a dent in the debt. It is hard to put a value on the ABC but if you look at networks like Channel Nine as a form of benchmark then it isn’t going to be worth more than a couple of billion. As such the argument that privatisation is an imperative because of the debt is hard to make. It would have to be as part of a broad raft of reforms.

    http://en.wikipedia.org/wiki/Nine_Entertainment_Co.

  20. Eyrie

    Where it is going is the same shithole that the US and Europe are in. As quickly as possible. 4% of GDP is around 20% of government spend so the Feds are living 20% beyond their means. What can you expect from a bunch of wilfully ignorant, barbarian looters aka the ALP and every other leftie on the planet?

  21. Abe

    Maybe the AOFM is making the most of the global turmoil that has pushed bond rates below 4%?

  22. Louis Hissink

    Selling the ABC ? Who would buy it with its in-house bias and collectivist approach to everything? Ted Turner of CNN might, come to think of it.

  23. Thanks Skuter. Interesting! Might be worth a call to Finance, to see what is going on.

  24. johno

    As such the argument that privatisation is an imperative because of the debt is hard to make. It would have to be as part of a broad raft of reforms.

    I argee. The arguement for privatisation is two fold. The minor arguement is that the proceeds can be used to reduce governemnt debt. The major arguement is that government has no role in delivering these services and Australians would be better off if they were delivered by the market with taxpayers providing assistance to the poor so they can access a basic level of services.

  25. Woolfe

    Imagine if News Ltd purchased the ABC!

  26. JC

    I

    magine if News Ltd purchased the ABC!

    lol… The crying and the hysterics would be so worth it. In fact if the choice was hell for eternity or experiencing the pleasure of seeing the ABC sold to News and watching the hysterics I honestly would have to flip a coin.

  27. Skuter

    Johno, I agree with you that the major rationale for privatisation is that government has no role in providing goods and services that are excludeable and/or rivalrous in consumption, but improving the public balance sheet is largely a smokescreen. Take the NBN. The government will borrow funds by issuing bonds to provide the equity injections into NBN Co. Then, if as many have anticipated, revenues don’t materialise as expected, we will see another private company come in and buy that equity in NBN Co at bargain basement prices. Meanwhile, the taxpayers gets bent over and rogered royally…

  28. JC

    It is hard to put a value on the ABC but if you look at networks like Channel Nine as a form of benchmark then it isn’t going to be worth more than a couple of billion.

    It wouldn’t be hard to value the ABC at all. That’s silly. That’s what I bankers do all the time with IPO ans shit.

    Where do the commercial channels trade in terms of multiples. Radio stations. Where do those with a clearer business trade.

    What is the risk that viewers (some of them) at least would walk. You can do poll research to get a reasonable idea.

    It would be a great assignment for any I-banker to do as it would be a satisfying consult.

    My rough guess is that you could say they would earn around $500 million. If you look at their annual report they currently earn around $184 million, 79 million of that is from merchandising and the rest I presume is shit like royalties. So if you stick a multiple of around 7 times earnings, you get valuation of around $3.5 billion.

    Knock off 20% discount in order to IPO it and you’d get a value of around $3 billion.

    Here’s their annual report. Interesting that they don’t show the locale of their TV viewers because they don’t want to say it’s all the inner city boring leftie, fascist green voting fuckers.

    http://www.abc.net.au/corp/annual_reports/ar10/pdf/ar2009_10_complete_report.pdf

  29. JamesK

    JamesK, Whoops this is the right one – I forgot to add all the dubyas 🙂 My apologies

    Thanks Louis

  30. JamesK

    If you look at their annual report they currently earn around $184 million, 79 million of that is from merchandising and the rest I presume is shit like royalties

    And if the they advertised?

    2-3 years managed by Roger Ailes to do the initial bloodletting (Rangas bleed more) and restructure and then sell it as as an IPO.

    Possibly $5 billion plus to cut Labor debt?

  31. cohenite

    I agree, the ABC should be sold; in fact it is a policy of The Climate Sceptics.

  32. TerjeP

    I agree, the ABC should be sold; in fact it is a policy of The Climate Sceptics.

    From memory the LDP policy is to give it away via handing out shares equally to all citizens.

    JC – I said a couple of billion but I’ll happily defer to your more considered figure of three billion. It doesn’t change my overall political point. It should be done but using the argument that it is necessary to reduce debt does not wash that well given how little difference it makes to the debt. Privatising the ABC is best argued from a point of principle. That government should not be in the broadcast business is not principly a financial argument.

  33. Jc

    It should be closed, not sold as a lesson.

    3 billion or so is neither here nor there in terms of the instructive lesson it would offer.

  34. boy on a bike

    All that borrowing shouldn’t be going to the NBN. According to their business plan, page 142, capital expenditure is as follows:

    2011 – $1.56bn
    2012 – $2.02bn
    2013 – $3.45bn
    2014 – $4.9bn
    2015 – $3.83bn

  35. Winston Smith

    3 Billion here, 3 Billion there, and pretty soon you’re looking at serious money.
    Besides which, Their ABC is the flagship of their propaganda machine. To lose it would be a rather nasty smack in the mouth to the Left.
    It may make them warier next time. What could they do in return? Get rid of another government department?

  36. TerjeP

    In terms of what the Liberals should do in the short term which is both good policy and workable politics would be to open up the ABC to advertising on the basis that it needs to find innovative ways to raise revenue without harming the economy. The case for privatisation can be publicly argued for at a later date. In the interim the ABC get’s a commercial focus and starts caring more about ratings.

  37. TerjeP

    Winston – you are right but there is politics to consider. The ABC is a protected species not just for the left but also somewhat for the centre of Australian politics.

  38. JamesK

    In the interim the ABC get’s a commercial focus and starts caring more about ratings.

    Nah. Just look at NPR/PBS in the US.

    It will be a recipe for Big Business/Finance to support big government with ‘sponsorships breaks’ rather than commercials for ‘noble’ causes and ‘caring-for-the-community’ shit.

    It would make the ABC even more insanely leftward than it is presently

  39. Winston Smith

    …and you can add the 916 Million for the Department of Climate Change and Energy Efficiency.
    It all adds up.

  40. daddy dave

    you are right but there is politics to consider. The ABC is a protected species not just for the left but also somewhat for the centre of Australian politics.

    You’re right the ABC would be a big cakefight, but on the other hand it is a major left-wing power centre. Other left-wing interest groups that they should put in the crosshairs include the maritime and aviation unions, the Australian film industry, government invented industries such as solar and wind, environmental consulting, and possibly various sections of the arts. Also, if they’re game, propped up industries such as auto.

  41. TerjeP

    Daddy Dave – I think all those fights would be easier.

  42. daddy dave

    You’re probably right. Tho the ABC from the sidelines would run commentary on every one, sympathetic to the interest group in question and against the Libs.

  43. Skuter

    Terje, dad,
    Might I add the public sector unions (particularly the CPSU) to that list? At a minimum, the CPSU should be forced to disaffiliate with the ALP. There is no way supposedly independent public servants should be allowed to belong to an organisation that is basically an industrial offshoot of a political party. With all the HSU shit hitting the fan, there is no better time to have a crack at the relationship between the unions and the ALP…

  44. Ralph Buttigieg

    G’day,

    The real untouched fruit ripe for privitization is Australia Post. Remember they are far more then a letter delivery service. They have the most extensive face to face customer service network in the country. They should be doing a lot more with that then they are doing now.

    ta

    Ralph

  45. Rabz

    Hey Winnie,

    Good work keeping this front and centre.

    The stupid profligate bastards…

  46. Guardianangel

    Journalist Milne and broadcaster Michael Smith have recently touched on some ‘old news” which showed how, in the 90s, money could just disappear from the AWU via a CON person who was intimately connected to the current PM. She created accounts, unknowing as to their usage of course as she vehemently contends, for this man Bruce Wilson, who then banked AWU money into them for his private use. 1.5 Million disappeared this way. No one was brought to justice. Wilson has just evaporated.

    Perhaps some new false accounts have been opened up with “Australian Government” on them and the monies are once again disappearing into them! Where is that Bruce Wilson person?

    Seriously though how can we trust these people after they, PM Gillard and Bill Shorten, amongst the many involved in that AWU scandal, have now progressed through the union system to being rewarded safe Labor seats and have now become “our” government. These same people have control over the country’s finances and superannuation funds. I am more than scared for us all.

  47. TerjeP

    Skuter – I think the Liberals need to be careful not to look too cunning. They may be way ahead of Labor at the moment but they recently stuffed up with over reach in terms of work choices. The unions are shrinking. As Frank Sartor said recently the unions have gone from being patrons of the ALP to parasites on the ALP. If the beast is dying from natural causes it may be wise not to get your hands too dirty. I think the sanest reform the Liberals could pursue is to allow competition for members between unions. That is easy to argue for, hard to argue against and it probably ends the automatic link between unions and the ALP.

  48. Ralph Buttigieg

    TerjeP, the great holdout of unionism is the public service. The best thing the Liberals could do is open up government administration to competition. If necessary actively create markets as the Howard government did when it privitised the old Commonwealth Employment Service through the Job Network. Privitise Medicare, Centrelink, etc.

    ta

    Ralph

  49. TerjeP

    Ralph – no real argument with your point. It could in fact do both things.

  50. Capitalist Piggy

    It all depends on how you look at it.

    If you look at it like this, it looks really bad.

    But if you look at it this way, not so bad…though not so good either.

  51. Sean

    Speaking of screwups

    The Liberals and AWB..?

  52. daddy dave

    The Liberals and AWB..?

    Yeah, but how about that Khemlani affair, eh? How far back do you want to go playing tit-fo-tat?

  53. Winston Smith

    Awesome graphs, CP. Thanks.
    They will go up on the patient waiting room wall.

  54. Sean

    Yeah, but how about that Khemlani affair, eh? How far back do you want to go playing tit-fo-tat?

    Not that far, just that the general tone is as if the Liberals are perfect themselves which they are far from, a lot less crap than the ALP is as far as I would go. I’m all for good/better government not just supporting the Libs.

  55. daddy dave

    That’s reasonable I guess, although there seems to be little merit, when discussing the current government, in going back through history to past scandals involving the other side.

  56. duncan

    Excellent.

    I wonder how long my household would last if I went into debt at a rate of $90/wk/person. $450 per week.

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