It’s time for a quick government debt update.
Just the facts.
NET GOVERNMENT DEBT
At May 2017: $323 billion Source: https://finance.gov.au/publications/commonwealth-monthly-financial-statements/2017/mfs-may/
At September 2013: $175 billion Source: https://www.finance.gov.au/sites/default/files/mfs-september-2013.pdf
Increase in net government debt under current Coalition government: $148 billion or $3.36 billion a month.
GROSS GOVERNMENT DEBT
Friday 15 September 2017: Value of government securities on issue (Gross government debt) was $503 billion. Source: aofm.gov.au
Increase in gross government debt under current Coalition government: $230 billion or $5.23 billion a month.
WHAT ABOUT LABOR 2007 TO 2013?
When the Coalition lost the 2007 election and Labor won it, net government debt was negative - ie, it had financial assets of $28 billion (as at 31 October 2007) Source: https://www.finance.gov.au/sites/default/files/mfs_oct2007.pdf
Under Labor (2007 - 2013), net debt rose by $203 billion or $2.86 billion a month, even during the GFC and with associated fiscal stimulus policies, some $500 million a month less than current Coalition government.
When the Coalition lost the 2007 election, gross government debt (government securities on issue at June 2008) was $59 billion. Source: https://archive.treasury.gov.au/documents/1321/HTML/docshell.asp?URL=06_appendix_b.htm
Under Labor (2007 – 2013), gross debt rose by $214 billion or $3.01 billion a month, which is more than $2.2 billion a month below the monthly run rate of the current government.
This article first appeared on The Guardian web site at this link: https://www.theguardian.com/commentisfree/2017/sep/11/turnbull-and-morrison-dont-talk-about-unemployment-its-a-deliberate-but-dodgy-cop-out?CMP=share_btn_tw
Turnbull and Morrison don't talk about unemployment. It's a deliberate but dodgy cop-out
It is a sad state of affairs to realise that the current crop of Australian policymakers have effectively given up on reducing unemployment.
Treasury reckons that the lowest the unemployment rate can go without there being a wages and inflation breakout is around 5.25%. The Reserve Bank of Australia notes something similar, forecasting that even when the economy is growing strongly at an above-trend pace, the unemployment rate will hover between 5 and 6%.
The current unemployment rate is 5.6% or some 728,100 people – enough to fill the Melbourne Cricket Ground about seven times. Given the Treasury and RBA estimates, it looks like Australia will never see fewer than about 700,000 people unemployed.
And it seems to be a peculiarly Australian issue. In the US, the unemployment rate is 4.3%, in the UK it is 4.5%, in Japan it is 2.8%, while in Germany the unemployment rate is 3.9%. And none of these countries are experiencing a wage/inflation problem. Indeed, even with the very low unemployment rate in Japan, wages are actually falling.
This article first appeared on the Yahoo7 Finance website at this link: https://au.finance.yahoo.com/news/1714473-004126949.html
Why the RBA refuses to cut rates
The forecasting record of the Reserve Bank of Australia is poor, but that has not stopped it relying on its forecasts, rather than hard data, when setting monetary policy.
In the past year where interest rates have been left unchanged at a level that is amongst the highest in the industrialised world, the RBA has been banking on its forecasts for stronger economic growth, a lift in wages and rising inflation to validate its failure to join the rest of the world with ultra low interest rates.
There are a couple of consequences of this approach from the RBA.
Importantly, despite its status, the RBA is made up or mortals. Sometimes its forecasts are wrong. And in recent years, the RBA forecasting record has been wide of the mark on growth, wages and inflation.
As the data has unfolded through the course of the past year or so, contrary to the rosy outlook from the RBA, economic sluggishness remains the order of the day.
The Dun & Bradstreet Business Expectation survey confirmed a mixed picture for the economy.
The full report is at this link https://dnb.com.au/article-bex-q4-2017-final.html#.WbBm1zOB24k
Growth prospects remain mixed across the country
Uncertain economic conditions continue to impact optimism across the Australian business landscape, with sentiment softening for the final quarter of 2017. In Dun & Bradstreet's August Business Expectations Survey, businesses predicted lower sales, employment and selling prices for the December quarter, despite a general pick-up in business activity during the June quarter. However, capital investment and profits are tipped to rise.
This article first appeared on the Yahoo7 Finance website at this link: https://au.finance.yahoo.com/news/five-ways-grow-wealth-230647235.html
5 ways to grow wealth
Luck certainly helps some people get wealthy.
For the rest of us, careful planning and an understanding of markets, investing strategies, economics and finance are vital aspects of going down the path of wealth creation.
There are many aspects to wealth creation and the list below covers just five of those. These are the five characteristics or strategies usually evident in most wealthy people and if you follow them throughout your life, you will probably have more wealth than those who don’t.
Buy a house to live in
Owning your own house to live in is the best way to both meet the need for a roof over your head and to accumulate wealth. House prices were high 30, 20 and 10 years ago. They still are. Postponing the decision to buy a house has proven to be a financial disaster in just about every year since house price records started in the 1800s. Mortgage repayments are not only ‘forced savings’ but even with modest price growth, on such a big asset the wealth gains over a long time frame (think well over 10 years) are substantial. Once you build some equity and wealth in your own house, it can be used, in time, to finance other wealth creating investments.
This article first appeared on The Adelaide Review site at this link: https://adelaidereview.com.au/opinion/politics/paying-fair-share/
Paying Their Fair Share
It’s the age-old question: why don’t governments deliver policies that are good for the electorate? Well, the answers are numerous.
Politics and policymaking should be simple. After all, being in government and delivering what voters want — making them happy in other words — and increasing the chances of re-election seems to be the proverbial win-win scenario.
Which begs the question, why don’t political parties do it?
Why don’t they deliver policies that are good for the electorate and good for their re-election chances?
Let’s cut to what the voters, in general, want.
A policy framework where each person who wants a job gets a job is key. In addition, access to quality and affordable health care and education, from kindergarten to university to trades training is fundamental. There are other issues that are basic, simple and fair.
Voters want the government to provide aged-care services that treat the older members of society with dignity. We want decent infrastructure, especially pubic transport and roads. We want people who are doing it tough to be supported by a welfare safety net — a decent rate of pension, unemployment benefits and disability support.
So far, so good.
This article first appeared on The New Daily website at this link: https://thenewdaily.com.au/money/finance-news/2017/08/16/stephen-koukoulas-unemployment/
Australia has given up on solving unemployment
It is a sad state of affairs to realise that the current crop of Australian policy-makers have effectively given up on reducing unemployment.
Treasury reckons that the lowest the unemployment rate can go without there being a wages and inflation breakout is around 5.25 per cent.
The Reserve Bank of Australia notes something similar, forecasting that even when the economy is growing strongly at an above-trend pace, the unemployment rate will hover between 5 and 6 per cent.
The current unemployment rate is 5.6 per cent or some 728,100 people – enough to fill the Melbourne Cricket Ground about seven times.
Given the Treasury and RBA estimates, it looks like Australia will never see fewer than about 700,000 people unemployed – no matter what kind of improvement we see in the latest jobless figures on Thursday.
It seems to be a peculiarly Australian issue. In the US, the unemployment rate is 4.3 per cent, in the UK it is 4.5 per cent, in Japan it is 2.8 per cent while in Germany, the unemployment rate is 3.9 per cent. And none of these countries is experiencing a wage/inflation problem. Indeed, even with the very low unemployment rate in Japan, wages are actually falling.
This article first appeared on the Yahoo7 Finance at this link: https://au.finance.yahoo.com/news/1607453-054918623.html
Are you paying more or less in 2017?
When it comes to questions of cost of living, Australians are not all that good at identifying where their household budgets are being stretched or where they are making savings.
In its most recent survey, polling company Essential Research, asked voters whether “compared to two or three years ago, is your household paying more or less for the following” and thereafter it listed 10 items. Since the end of 2014, two and a half years ago, the overall consumer price index has risen by 3.8 per cent, a modest overall gain over that time.
The respondents were spot on when it came to judging electricity and gas prices. A total of 84 per cent said that they were paying “a lot more or a little more” for their power. According to the Australian Bureau of Statistics, since the end of 2014, electricity prices have in fact risen 7.1 per cent.In terms of insurance costs, 69 per cent indicated that they were paying more, a figure confirmed by the ABS with an 11.6 per cent rise since the end of 2014.
For medical and dental costs, 63 per cent indicated they were paying more, with just 3 per cent saying they were paying less. The ABS data indicate that medical, dental and hospital costs have risen a substantial 16.9 per cent in just two and a half years.
These results are not surprising.
Consumers were, however, wide of the mark when it came to some other items.
The RBA appeared before the House of Representatives Economics Committee today.
Here are some of the things its officials said:
Economic growth is likely to remain below trend for a couple of years.
Inflation is going to remains below the mid-point of its target till beyond the forecast horizon.
The unemployment rate is going to remain above the level associated with full-employment until at least the end of the forecast horizon.
Wages growth is likely to remain well below the long run average for many years, a point which will crimp household spending and bottom line GDP growth.
Yet, and here's the ZINGER
The next move in interest rates is likely to be up!
Kouk Polling – a subsidiary of Market Economics – conducted an informal, unscientific, voluntary Twitter poll to test the support for the question of marriage equality in Australia.
The poll, which was conducted over the 24 hours to 5.30pm, 10 August 2017, asked the question:
Should the Marriage Act be changed to allow same-sex couples to marry?
Of the 6,948 people who voted, 92 per cent said “yes”, with 8 per cent voting “no”.
Even with a margin of error in the poll of 41 per cent, the “yes” vote would carry.