In Question Time Julia Gillard got asked when the ALP would ever balance the budget. Abstracting from the theatre of the moment (Tony Abbott did lay it on a bit thick) that is a reasonable question.
Gillard blamed the GFC for reducing government revenue resulting in budget deficits.
We’ve covered this ground before and it just isn’t true.
First look at the table – it sets out actual and expected tax revenue from recent Budget Papers and the latest MYEFO. (Remember – tax revenue is not total revenue).
At the height of the GFC, in early 2009, the government was busy preparing its 2009-10 Budget. That Budget forecast taxation revenue out to 2012-13 – this financial year. At that time the government expected to raise some $321 billion in tax revenue. The latest MYEFO indicates that the government now expects to raise some $339 billion in tax revenue this year.
So, in fact, tax revenue is above expectations that were formed at the depths of the GFC.
Expected tax revenue was ramped up in the 2010-11 Budget and again in the 2011-12 Budget. While actual tax revenue grew in those years, it didn’t meet expectations. Yet the government based spending decisions on expected tax revenues that disappointed two years in a row.
So the government didn’t learn from its mistakes. Those mistaken expectations were formed after the GFC – so it is bit difficult to blame them on the GFC itself.
So the follow up question was how can the prime minister keep blaming the GFC given that it ended four years ago? At this point she was left blustering about Greece, Cyprus, Italy etc. In short claiming that the GFC never ended. I don’t know that this sort of argument helps her case. The party line has been that (a) the Rudd government saved Australia from the GFC and (b) things were so good that we’d be back to surplus this year. We’re now invited to believe (c) the GFC never ended. But those three propositions are incompatible with each other.
I’m amazed that you would even pose the question on “how can Gillard claim that the GFC is responsible?” Everyone has known for quite a long time that this woman is a hopeless liar. She has added mendacity to incompetence and the resulting package is not a pretty one. The sad thing for her is that most voters in Australia know exactly what needs to be done and they are finding it hard to wait until September. When the great day arrives it will be bye bye Julia and bye bye to her handbag carrier Tim.
Robbo
20 Mar 13 at 4:57 pm
” when the ALP would ever balance the budget”
It’s like one of those trick questions isn’t it? You know the obvious answer, but surely that’s just TOO obvious, right? I mean it has to be more complicated than that. It’s like asking, what colour is blue?
Makka
20 Mar 13 at 5:14 pm
Sinclair
I read a piece the other day in SMH which again trumpeted that current spending as against GDP was less than under Howard. I’m sure you debunked that recently. Is that correct?
Jock
20 Mar 13 at 5:18 pm
Just another day in the seemingly unending Theatre of the Absurd that is the worst ever government in this country’s history.
Rabz
20 Mar 13 at 5:19 pm
Yes. If Labor saved us from the effects GFC, then our tax revenues cannot be lower because of the effects of the GFC.
On the other hand, if tax revenues are lower because of the effects of the GFC, then Labor cannot have saved us from it.
They have never understood this.
Milton Von Smith
20 Mar 13 at 5:24 pm
Yes, Rabz, but sometimes it feels like Waiting for Godot and at other times it’s more Groundhog Day.
Gab
20 Mar 13 at 5:24 pm
The US Statist comrades are also in a rancid mood tonight…as predicted the non, but pretend, “assault” rifle lookalike ban has gone to god. It’s been excised from the Bill for a stand alone.
it’s an ex parrot. How will Fairfax cope?
Alfonso
20 Mar 13 at 5:25 pm
revenues are affected by the GFC that labour saved australia from going through with a fiscal expansion??
Jim Rose
20 Mar 13 at 5:28 pm
Didn’t the GFC occur during 2007-2008? gillard must believe the GFC still continues today.
Gab
20 Mar 13 at 5:31 pm
The GFC hasn’t ended; it’s a little hard to contend more than that we have moved into the eye of the storm.
The debt is still there, only now it is sovereign debt and will bring down nations, not companies.
Driftforge
20 Mar 13 at 5:37 pm
Gittens was busy defending them the other day with the NGDP line. Obviously gillard is contradicting the swan-is-the-greatest narative, I wonder if anyone will pull her up in the MSN.
It does bear asking why taxes are down as a percent of GDP. Given that we haven’t had a decline in GDP, the decline is just in taxable income, which means there must have been a relatively greater increase in deductible costs and depreciation. Part of which I guess would be the mining investment boom. What other deductible costs have been going up relative to GDP?
Pedro
20 Mar 13 at 5:40 pm
Yes it has. What we are seeing now are the after effects of the GFC.
Gab
20 Mar 13 at 5:42 pm
Using the tax revenues supplied, Gillard is getting 31% more tax than that received in 2009-10.
They are however correct – the annual growth in tax has slowed from 13% in 2010-11 to 6% in 2012-13.
Pretty good evidence for a strangulation (stalling?) of the economy by green overheads/redtape/fairwork/borrowings and a coming australian GFC event.
or
Really greedy governments get less tax because taxpayers get annoyed and dont work as hard?
GoWest
20 Mar 13 at 5:52 pm
We are in a DFC – Derived Financial Crisis.
Louis Hissink
20 Mar 13 at 6:04 pm
More like the SFC. Swan Financial Crisis.
Gab
20 Mar 13 at 6:13 pm
No, it hasn’t.
The very same problem still exists, even if it is not currently so acute as it was originally. No one will feel clear of this storm until after the other side passes.
Cyprus is just a first gust.
Driftforge
20 Mar 13 at 6:39 pm
Yes it has. Check the TED spread and see that it’s back to 03/04 levels.
Gab
20 Mar 13 at 6:43 pm
TED?
Driftforge
20 Mar 13 at 6:47 pm
Wow! You know I was looking at Ted as far back as the early 90′s late 80′s. Now everyone’s looking at it.
Spread between 3 months US treasury bills vs 3 month libor. It’s a marker for risk appetite. If the spread blows out it means the appetite for risk is falling. That’s really bad for stocks.
JC
20 Mar 13 at 6:54 pm
The TED spread is an indicator of perceived credit risk in the general economy.[2] This is because T-bills are considered risk-free while LIBOR reflects the credit risk of lending to commercial banks. When the TED spread increases, that is a sign that lenders believe the risk of default on interbank loans (also known as counterparty risk) is increasing. Interbank lenders, therefore, demand a higher rate of interest, or accept lower returns on safe investments such as T-bills. When the risk of bank defaults is considered to be decreasing, the TED spread decreases.[3]
http://en.wikipedia.org/wiki/TED_spread
What metric do you use?
Gab
20 Mar 13 at 6:54 pm
bank stocks ETF is a good one. FAZ. Transportation stocks and Utility stocks as utilities carry a higher debt burden and they end up getting seriously pinged if credit spreads blow out.
There’s a host of shit.
Even the Aussie/Yen is a good indicator or was until the new Jap government decided they were going to do a massive QE.
JC
20 Mar 13 at 6:58 pm
Oh fek, can’t we just have some laws to jail lying politicians? A mandatory stint in prison for say 10 years for fraud perpetrated on the people would feel satisfying and maybe would be a nice lesson for the rest. Let’s start with Swan, Gillard, Wong, Conroy, PliberSiCK, then we can cast around for a few others…
lem
20 Mar 13 at 6:59 pm
I thought the dog ate it.
duncanm
20 Mar 13 at 7:23 pm
Heavy burden, lem, called the burden of proof.
How do we actually nail these morons? They are as elusive as sub-atomic particles, or as one wag has put it, “the universe is composed of protons, neutrons, electrons and morons. Only the first three can be targetted.”
John A
20 Mar 13 at 7:25 pm
TREASURY boss Ken Henry has declared the global financial crisis is over as Australia’s unemployment rate fell to an 11-month low.
Australian Bureau of Statistics figures showed business was booming nationally and employing both full-time and part-time workers, with Australia’s jobless figure falling to 5.3 per cent from 5.5 per cent.
The decrease came as Dr Henry told a Senate Estimates hearing yesterday the worst of the downturn had passed.
Read more: http://www.couriermail.com.au/business/gfc-is-over-treasury-boss-ken-henry/story-e6frfm1i-1225829533800#ixzz2O4E8Pszc
Gab
20 Mar 13 at 7:38 pm
@John A
Yeah I guess you’re right. Two hundred billion dollars really isn’t enough burden of proof. Still, for this lddle ol’ taxpayer, it sure FEELS like a heavy load.
lem
20 Mar 13 at 7:46 pm
- gillard, 5 Feb 2013
Gab
20 Mar 13 at 7:53 pm
Gold is still up. Interest rates are still down. Public debt levels are still beyond the point of no return in Europe, Japan and the US. Private debt levels are still at tightrope levels here.
Maybe the credit crunch has passed; the GFC still has a long way to go.
Driftforge
20 Mar 13 at 7:58 pm
Very well argued, Sinclair – especially the conclusion.
She really is a complete bone head.
C.L.
20 Mar 13 at 8:07 pm
Nice work, Gab.
LOL.
C.L.
20 Mar 13 at 8:08 pm
It has got to the point where it is now a live option whether or not the next Caucus meeting should end with it being encased in a concrete sarcophagus.
dover_beach
20 Mar 13 at 8:23 pm
The GFC hasn’t ended;
Yes it has. What we are seeing now are the after effects of the GFC.
No we are seeing the effects of kicking the can down the road for a few years. They are running out of places to kick the can.
Paul
20 Mar 13 at 9:20 pm
So do I continue buying gold? I have a windfall coming in the next few months.
Bank it? don’t think so.
Hide it under the bed? waste of time.
Buy gold/silver? Seems the best option.
Property? There’s that property bubble that hasn’t popped yet.
Spend it on a new Maserati?
Winston Smith
21 Mar 13 at 9:46 am
Winston, as long as you buy something real you are good.
Driftforge
21 Mar 13 at 10:00 am
Julia lying to parliament? Just another example
Alan Grey
21 Mar 13 at 10:12 am
Winston, you could always follow George Best’s example.
Steve of Ferny Hills
21 Mar 13 at 10:19 am