And why wouldn’t it? It was never more than a PR stunt, via The Australian: Federation reform could be the secret to improving productivity in Australia and avoiding blurred responsibility in fields such as health, the treasurer, Josh Frydenberg, has suggested. In a speech to be delivered at the University of Adelaide on Thursday, Frydenberg reveals
The Australian Budget has a history of running small deficits and surpluses with occasional blowouts. Contemporary history has seen General Government net debt to GDP approach 20% under Labor in 1995 and the Coalition in 2017. In between, a Coalition government under Prime Minister John Howard and Treasurer Peter Costello ran surpluses sufficient to pay net debt down to zero during Australia’s mining boom.
Ratings agencies have adjusted the sovereign credit rating over time to reflect this ebbing and flowing of debt. In 1975, Standard and Poors rated Australia AAA. By 1989 the rating had dropped two notches to AA. It was subsequently upgraded again to AAA as the Howard Government operated consecutive surpluses.
The major vulnerability for the Australian Budget is the external imbalance in an economy that runs persistent current account deficits. Because Australian banks borrow so much money in international markets largely to fund domestic mortgages they are constantly at risk of international liquidity shocks.
The Australian Budget steps in with public guarantees to the banking system when this happens. Thus, although the Australian Budget has relatively low debt-to-GDP metrics, credit rating agencies demand that they remain that way to preserve the AAA rating as a backstop to bank borrowing.
Australian politics insists that Australia sustain budget surpluses ostensibly because it is equated with good economic management. In truth, the surplus is simply a figment of the property bubble at the heart of the Australian economy that requires the support of the tax-payer to persist. The Australian Budget is the key stone in the Australian credit arch.
In recent years the Australian Budget has deteriorated as the structure of the economy has left is denuded of growth sources. As the mining booms passed and the enormous household debt (186% of GDP) stalled consumption and investment, fiscal deficits became a key component in GDP growth.
As well, the disintegration of Australian political integrity associated with the end of the mining boom period doomed the Budget to successive regimes of neglect.
This very obviously undermined its role in the above system exposing Australia to deeper adjustments during future periods of global stress.
MacroBusiness covers all apposite data and wider analysis of these issues daily.
Despite undergoing a record $93 billion re build, and selling-off nearly every public asset possible, NSW Treasurer Dominic Perrottet admits the state faces a massive infrastructure shortfall of $30 billion, as unrelenting immigration overruns Sydney: NSW faces a massive infrastructure funding shortfall of about $30 billion needed to drive projects critical to building the state’s
In the 14 years to June 2018, Melbourne’s population ballooned by 1,320,000 or 36%, with an average of 94,000 people flooding into the city each and every year, driven mostly via immigration: And over the next 48 years, Melbourne’s population is projected by the ABS to more than double to 10.2 million people, growing at
Australian Housing and Urban Research Institute (AHURI) has released new research claiming that older empty-nesters are clinging to their larger family-friendly homes. The AHURI also recommends a wide range of tax reforms to encourage seniors to downsize: “They like to stay where they’re familiar,” said lead researcher Associate Professor Stephen Whelan from the University of
The Australian’s Adam Creighton has continued his war against the Aged Pension’s largesse towards wealthy retirees, labelling it “an economically costly inheritance preservation scheme”: Last week figures emerged showing about 255,000 pensioners lived in homes worth more than $1m, costing taxpayers an estimated $6.3bn a year — enough to reduce the top marginal tax rate
If this is his reassurance tour then he should go back to Canberra, from L-plated Treasurer Josh Recessionberg today: “In today’s global environment characterised by changing demographics, elevated debt levels, environmental pressures, and great power tensions, it’s critical that we pursue reforms at home that retain our competitiveness, openness, and fiscal discipline, and that globally
A new report by the Australia Institute estimates that through its sovereign wealth fund’s two-thirds ownership of Equinor, the Norwegian Government stands to make $8.1 billion from oil and gas exploration in the Great Australian Bight, which is greater than Australian taxpayers would make: Norwegian oil company Equinor is planning exploratory drilling for oil and
Tasmanian Liberal Premier, Will Hodgman, has joined the chorus of commentators calling on the Morrison Government to lift Australia’s deplorably low Newstart Allowance: “It would be a good thing to see those on low incomes and those who do depend on social security benefits to have an increase to reduce that pressure in their lives,”
The best laid plans of mice and property locusts, via the AFR: Big banks are seeking the flexibility to charge higher interest rates under the Morrison government’s scheme to help first home buyers because of the increased risk of lending to first-time borrowers with as little as 5 per cent deposit. The big banks also
Apparently Australia’s L-plated Treasurer, Josh Recessionberg, is about to try to convince the nation that it’s all good with the economy: Labor will accuse the Morrison government of putting the nation at risk from a “cancer of complacency” ahead of a series of addresses by Treasurer Josh Frydenberg to reassure consumers over the state of
Finance Minister Mathias Cormann said yesterday that the federal government would consider bringing forward income tax cuts in an effort to stimulate the economy. Westpac and the Commonwealth Bank have both called on the government recently to ‘fast track’ tax cuts in an effort to boost consumer spending. Cormann says the government’s inclination is to
With NSW’s stamp duty receipts sinking like a lead balloon: NSW Treasurer, Dominic Perrottet, has called for tax reform, including the elimination of inefficient state taxes like stamp duties, to spur growth: Given that the NSW government is already building almost as much infrastructure as the market can handle, slashing taxes for business and homebuyers,
The CEO of Medibank Private, Craig Drummond, has warned that Australia’s private health insurance system faces an “existential crisis” as cost pressures drive healthier, younger members out of the system: “The hardest problem is solving this inevitable and inexorable increase in cost in the system,” Drummond says. “So how do we bridge that gap between
The Australian Taxation Office (ATO) estimates that some property owners have undeclared income of more than $70,000 a year in earnings from short-term rental platforms like Airbnb. This has contributed to an income tax shortfall of around $9 billion. The ATO has used data-matching technology to compare income from tax returns with financial records provided
Back in 2016, Prime Minister Malcolm Turnbull proposed allowing the states to levy their own income taxes so that they can pay for their own services, such as hospitals and education. However, the proposal was viewed with skepticism by the states, as noted by Fairfax’s Mark Kenny at the time: While outwardly wanting to appear
Via FTAlphaville: The skill of the good economist, like the good writer, lies not just in what they include in their work, but what they choose to leave out. The real world is hideously complex. So too are people. If economists are going to tell us anything about either, then they must resort to abstraction.
It was dubbed the “biggest public policy scandal in Australian history: the systematic rorting of the vocational education and training system (VET)”. It was the reckless policy first introduced by the Howard Government and then expanded by the Gillard Government, which gave private VET providers virtually unregulated access to government subsidies for every student they
L-plate treasurer, Josh Recessionberg, has done the near impossible and crashed the miracle economy. When he assumed the role of Treasuerer, Recessionberg made a critical misjudgement that if he follwed the Costello recipe of running surpluses, cutting taxes and stuffing in migrants then he’d force the RBA to ease, and rising house prices would boost
After last week reporting that some wealthy seniors are deliberately ‘upsizing’ to more expensive homes in order to receive bigger Aged Pension payments, The Australian’s Adam Creighton reports today that elderly Australians living in $1m-plus homes are claiming $6.3 billion in pension payments: Retirees living in $1m-plus homes are receiving more than $6.3bn a year
When the Howard Government navigated his GST reform package through the Senate at the turn-of-the-century, it was forced by the Democrats to exempt fresh food, health and education in a bid to protect lower income earners from the GST’s regressive impacts. However, according to Crispin Hull, these exemptions have created perverse impacts, with higher-income earners
Australian motorists paid $19.68 billion in fuel excise tax in the 2019 financial year, but the forecast growth of electric cars creates the potential for a budgetary black hole. With the Electric Vehicle Council predicting 50 per cent of new cars sold in 2035 will be electric, EVC CEO Behyad Jafari says governments will need
We all know who runs the country, via the AFR: Treasurer Josh Frydenberg will instruct the corporate watchdog to tell banks to waive responsible lending standards for individuals who operate a small business, in a bid to ease the credit squeeze on the sector. Following meetings over the past week with the chief executives of
The Federal Court has struck down the Coalition’s controversial ‘backpacker tax’, introduced in 2016, ruling that it is unlawful to charge non-residents higher taxes than Australian residents: The federal court in Brisbane ruled it was not lawful that a non-citizen should have to pay more tax on earnings than an Australian doing the same job.
The percentage of Australians between the ages of 20 to 39 with private health insurance has fallen from 40% to 34% over the past five years. During the same period, older Australians have been claiming more on than their health insurance than ever. Private health premiums are rising much faster than inflation and wages growth:
The Australian’s Adam Creighton claims that some wealthy seniors are deliberately ‘upsizing’ to more expensive homes in order to receive bigger Aged Pension payments: Older Australians are buying more expensive homes in retirement to hang on to the Age Pension, according to experts who say pension eligibility rules are causing nationwide over-investment in housing. Part
Via the ABC: A $500-million scheme will help 10,000 first-home buyers get into the market with a smaller deposit than they would otherwise need. Prime Minister Scott Morrison promised before the election it would be people’s “first leg on the first rung of the ladder”. Then, housing and economic experts were dubious. Now, with more
While the Morrison Government refuses to lift Australia’s Newstart allowance, which has fallen to 30% below the poverty line: And is among the lowest in the OECD: So-called “Jobactive” providers are rorting Australian taxpayers of millions for doing “absolutely nothing”: A news.com.au investigation into the Jobactive scheme has unearthed multiple instances of substandard service, inefficient
The federal government announced in the 2017 Budget that it would remove a capital gains tax (CGT) exemption for around 100,000 expatriate Australians who sell their main residence while overseas. While the measure was projected to raise $581 million over the forward estimates, it has been condemned by tax and legal experts as being “unjustifiably
The NSW Government has demanded the federal government help pay for Sydney’s $20 billion Metro West Rail Line, which is desperately needed to cope with Sydney’s swelling population: Mr Constance took a swipe at his Coalition counterparts in Canberra for their reluctance to stump up for the new metro rail line from central Sydney to
Via Alan Kohler today: By how much? Well earlier this month, KPMG chief economist Brendan Rynne suggested between $77 and $83 a week, which would cost about $3 billion. Seems reasonable. Rynne’s argument was mostly about fairness, not fiscal stimulus: Newstart hasn’t increased in real terms since 1994 – if it had kept pace with