Last week the Federal Treasurer handed down his Budget with an opening announcement that “for the first time in 12 years, our nation is again paying its own way”!
The Treasurer projected annual budget surpluses for the next four years totalling $45 billion with surpluses continuing to build “as we climb the mountain and reach our goal of eliminating commonwealth net debt by 2030 or sooner”. This is debt that the Treasurer would have us believe was inherited from the previous government. Not completely true but I won’t focus on the pejorative commentary.
Anyhow, net debt is the government’s gross debt less its financial assets; however, it is the gross debt that needs to be serviced with the annual interest cost for the national debt now a massive $18 billion. That’s approximately $50,000,000.00 a day! The reality is that the surplus projected for next year of $7.1 billion would be wiped out if interest rates increased by just 1%, that’s how sensitive and vulnerable the numbers are.
A little drilling down on ‘the numbers’ in relation to the nation’s gross debt is necessary to add clarity to the truth. The previous government was in office from 2007 to 2013 when the nation’s gross debt grew from $58 billion to $257 billion, an increase of $199 billion.
The current government has taken the nation’s gross debt to $692 billion, an increase of $435 billion.
How can our representatives overspend by $435 billion and then beat their chest about restoring the nation’s finances without increasing taxes? How is that responsible progressive disciplined management? If we can’t reduce expenditure to live within our means, then perhaps we should increase taxes (not reduce them), rather than continue to fund deficits with unconstrained borrowings, a debt of $692,000,000,000.00.
Higher growth has been underwritten and financed from excessive debt which means the record number of new jobs/lower unemployment and reduced welfare costs have been synthetically manufactured; funded by enormous amounts of borrowed money at a rate that is straight up irresponsible! These apparent positive economic indicators are the result of artificial market intervention and not a consequence of a stronger economy. Thus, the Treasurer’s performance figures are skewed with massaged statistics that are not reliable or sustainable in the long-term.
It is unbelievable that populist politicians think that they have demonstrated budget discipline for a stronger Australian economy when the whole system has been pump-primed with cash to stimulate debt-funded growth. When it comes to the goal of eliminating debt I can only quote Kevin Costner in JFK the movie, “I find your story simply not believable”.
So this is how the federal government celebrates being “back on track”. It’s a race to the bottom as all political parties advocate delusional strategies i.e. that lower taxes will somehow balance the budget. Smoke and mirrors, magic and bull dust, it smells like the absence of ‘truth and honesty’ as all political parties promise the electorate more of what is already unaffordable. It’s becoming a case of who you mistrust the least!
One undeniable truth is that at some point, a future generation will need to significantly forfeit their standard of living to pay for the debts that funded our irresponsible and excessive lifestyle.
8 April 2019
When all else fails there’s always delusion. Conan O’Brien