The Rudd Labor Government’s repayment strategy on its $300-billion+ debt has been reduced to a curve that turns down on page 3-9 on Budget Paper No.1 and hope that is eternal, said Senator Barnaby Joyce, the Leader of the Nationals in the Senate.
“In a very convenient omission we have a debt that in Budget Statement 3 Chart 3 trends down just after where budget projections for cash payments tabled conclude for 2012-13. The debt loads for 2013 tabled in February this year are now the debt loads for 2010: big change for the worse and a dire debt trajectory.
“The reality is that the Treasurer, Mr Swan, tells us that $315 billion is the anticipated 2012-13 Federal debt. State debts are now beyond $150 billion and the capacity to pay the interest on that is almost non evident after cost of funds goes beyond 6 per cent unless there is a wholesale disposal of public assets, a la Queensland’s end of financial year fire sale. It is a fact that should we need to quickly get our hands on a large capital injection by reason of a national emergency our position would be severely compromised because of the current debt.
“Interests rates have been underestimated because the yield curve is based on a point in time when the world was heading into recession and the cost of debt was low. The cost of debt that would accompany a recovery will become evident unfortunately our capacity to pay will not.”
Unemployment rates are heading up and Mr Rudd and Mr Swan require Treasury to constantly revise the economic figures away from their fanciful protestations that the show is under control. Their sole defence that “we are not as bad as others” and “what would you do if you were as silly as us” stands in poor proxy for management. We have learned in Senate Estimates today after the gyrations of the stock market the reality of the stimulus packages will be non-existent as Australia has to borrow ever more money to support the unemployed.
“Today’s quarterly economic result is a pleasant surprise but is due to exports prior to the March 31st shipping date, specifically coal and iron ore, and the decrease in imports reflecting a major turnaround in our trade position. It has nothing to do with a domestic stimulus package. What is clear is that the things that pay the bills are the very things that an Emissions Trading Scheme will compromise.
“As Dr David Gruen, executive director, Macroeconomic Group of Treasury, said at Senate Estimates, the Australian economy relies on the global economy. We do not drive it, it drives us.
“Our Nation should concentrate on supplying the global economy, not purchasing from it. Instead of building the Goonyella Rail Link or the Inland Rail to reduce port bottlenecks and investment in exporting sectors the Rudd Labor Government has spent its money on flat screens, ceiling insulation, boom gates, a myriad school halls and other promises that do little or nothing to the aggregate capacity of our economy and an ETS to compound our economic misery.
“We hope this crisis is not as severe as a depression but the only thing predictable about it so far is its unpredictability. In The Great Crash, 1929, Galbraith indicated that there were many swallows before there was a clear and evident spring. This is the same as what is happening now.
“Australia has a total liability in 2012-13 of half a trilllion dollars and added to this is the Government’s guarantee of bank deposits of $650 billion and State debts of more than $150 billion. If you make such guarantees you must be able to pay them. We have to repay the money borrowed for the stimulus package and the effect of the withdrawal of those funds from the economy will have a far greater effect going out than any stimulus factor attributed to cash handouts going in. If the contingent guarantees Mr Rudd has issued were called upon one would have to seriously consider could they be honoured. As Mr Swan knows, you have to back up your rhetoric with bucks if you sign the nation’s name to the account.
“We are looking at the potential for the endgame for our economy if things do not change soon in the current management critique.”