Morrison has donned rose tinted glasses

Wed, 10 May 2017  |  

This article first appeared on the Yahoo 7 Finance website at this link: 


Morrison has donned rose tinted glasses

As per the normal process, the 2017-18 budget documents went to the printer over the weekend, some 48 hours prior to Treasurer Scott Morrison delivering the budget to the Parliament.

In that time, flood of economic news has cast a shadow over the economic forecasts which are for an acceleration in economic growth over the next few years, a gradual fall in the unemployment rate and a quite staggering acceleration in wages growth.

“Optimistic” might be the catch cry of those budget forecasts.

Morrison is hoping that the economy will miraculously pick up, leading to a surge in tax revenue which feeds into the estimate of a return to budget surplus in 2020-21. Suffice to say, any shortfall in what would be a strong performance in the economy will lead to yet another blow out in the deficit and the return to surplus will be pushed back yet another year or two.

It is usually unwise to quibble with Treasury budget forecasts, but the forecasts underpinning the budget numbers are very rosy. Few, if any, independent forecasters have such a positive outlook for the economy. They are suggesting growth will be softer than assumed by Treasury and this is for good reason.

In terms of the immediate outlook, the economic news in the last two days has confirmed:

-   Two consecutive months where retail sales have fallen. Retail sales account for approximately 20 per cent of GDP so this is not good news.

-   A sharp fall in residential building approvals which are now down 20 per cent over the past year. There seems little doubt that dwelling construction will fall away during 2018 and 2019.

-   Evidence that Sydney house prices have fallen around 1.3 per cent over the past month, signalling, just perhaps, that the housing boom is not only ending, but is heading for something more sinister.

-   The iron ore price has fallen to around US$60 a tonne (approximately US$55 FOB) which is the level Treasury has used when framing its tax revenue estimates. The budget papers reveal that every US$1 move in the iron ore price would impact the budget bottom line by $420 million in 2018-19 terms. In other words, if iron ore prices drop to the current consensus levels, around US$15 below the current price, the budget deficit will blow out by $25 billion over 4 years.

There is also an important forecast in the budget that the unemployment rate edges down from the current 5.9 per cent to 5.25 per cent in June 2020 and that wages growth will accelerate from the current record low 1.9 per cent to a pre-boom pace of 3.75 per cent in June 2021.

At the moment, there are more than 750,000 people unemployed, and a further 1.1 million underemployed. These numbers are rising and there is nothing in the run of recent news to suggest and reversal in the near term. As such, the ability of workers to get a pay rise is limited, and the budget estimates for a surge in wages growth is built on foundations of sand. Any shortfall in wages growth will mean lower income tax collections, weaker spending and lower GST receipts.

While economic policies are the centre piece of most budgets, the performance of the economy is vital for delivering revenue to the budget bottom line.

This budget is framed on a range of upbeat economic forecasts and if there is even a marginal shortfall in the economy relative to those forecasts, the budget deficit and level of government debt will yet again be revised higher.

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Wed, 29 Jul 2020



Covid19 has opened a door for Australians to positively accept significant changes that will lead to a shared good. This rare opportunity enables us to achieve sustainable economic and social goals that create a new ‘normal’ as our way of life.

These Ten Steps are presented as non-partisan recommendations to the Australian Parliament in the firm belief that, if they embrace them, the Australian economy and society will be greatly enhanced after the Covid19 pandemic has passed.

*A job for you if you want one.
A significant increase in part time and casual employment can be created that will enable you to enjoy a more creative and peaceful lifestyle and to live longer and better. The traditional age at which you would have been expected to retire will become obsolete as a result. An access age for pension and superannuation will become your choice. This will enable you to remain in paid work for as long as you want to, on a basis that you choose, while boosting the productivity and growth of Australia.

*You will get wage increases that will be greater than your cost of living.
A demand for enhanced innovative skills at all levels of employment will be created as the economy grows in strength, thereby enhancing your stature in the workforce and enabling executive salaries and bonuses to drop to levels that are accepted as justifiable by employees, shareholders and customers.

The misplaced objective of the government of delivering a surplus, come hell or high water, has gone up in smoke

Tue, 07 Jan 2020

This article first appeared on the Yahoo Finance web site at this link:   


The misplaced objective of the government of delivering a surplus, come hell or high water, has gone up in smoke

For many people, the cost of the fires is immeasurable. 

Or irrelevant. 

They have lost loved ones, precious possessions, businesses and dreams and for these people, what lies ahead is bleak.

Life has changed forever.

As the fires continue to ravage through huge tracts of land, destroying yet more houses, more property, incinerating livestock herds, hundreds of millions of wildlife, birds and burning millions of hectares of forests, it is important to think about the plans for what lies ahead.

The rebuilding task will be huge.

Several thousands of houses, commercial buildings and infrastructure will require billions of dollars and thousands of workers to rebuild. Then there are the furniture and fittings for these buildings – carpets, fridges, washing machines, clothes, lounges, dining tables, TVs and the like will be purchased to restock.

Then there are the thousands of cars and other machinery and equipment that will need to be replaced.