Victoria and South Australia are seeking to impose levies on electric car users to compensate for not having to pay fuel excise, arguing they should help pay for road maintenance. However, the Greens have tabled legislation in the Senate aimed at discouraging these measures, arguing they will impede the move to net zero emissions and
Primary Section
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.
Aged care tax rejected by Frydenberg
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PBO: National cost of COVID response to reach $327bn over five years
The Parliamentary Budget Office (PBO) has released its National Fiscal Outlook, which estimates that the combined net debt of Australia’s three levels of government will blow out to almost $1.3 trillion in the five years to 2024. Federal, state and local governments are forecast to collectively spend some $327 billion on COVID-19 measures over the
How to fund aged care reforms
Around $27 billion was spent on Australia’s aged care system in the 2018-19 financial year, of which the federal government contributed around $20 billion. Economists warn that implementing the minimum recommendations of the aged-care royal commission would require annual expenditure on the sector to be increased by up to $9 billion. However, this could rise
Don’t raise taxes to fund aged care
It is reported in The AFR that the federal government will allocate an additional $452 million to aged-care in response to the final report of the royal commission into the sector, with further measures to be included in the May Budget. The report has made a total of 148 recommendations, with commissioners Tony Pagone and
Pro-cyclical Labor bins negative gearing reform
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NBN greed lambasted by Senate
The Senate passed a motion yesterday attacking NBN Co for paying almost $78 million in pandemic bonuses in the second half of 2020, describing the payments as “excessive, unreasonable, and lacking in justification”. The motion passed 32 votes to 30, with Labor, the Greens, Centre Alliance, PHON and independent Senator Rex Patrick all backing it.
Coalition’s $90b French subs are Australia’s worst ever pork-barrel
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Moody’s downgrades Dictator Dan
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Fitch retains negative outlook on Australian AAA
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Coalition shafts unemployed with measly $3.60 JobSeeker rise
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How the Coalition stuffed the NBN
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Should Australia adopt an unemployment insurance scheme?
Earlier this week it was reported in the mainstream press that the Morrison Government was considering an unemployment insurance scheme in lieu of permanently lifting JobSeeker. Under such a scheme, anyone made unemployed would be paid a fixed percentage of their income (e.g. 70%) for a set amount of time (e.g. three months) while they
Tourism industry begs for $7.7b JobKeeper bailout
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Australia’s public service loaded with fat cats
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Corrupted universities demand another $1b from federal government
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Dan’s West Gate Tunnel becomes financial black hole
In 2017, the Victorian Government agreed to an unsolicited bid from toll giant Transurban to build the West Gate Tunnel Project – a four kilometre toll road currently under construction in Melbourne to link the West Gate Freeway at Yarraville with the Port of Melbourne and CityLink at Docklands. Under the project’s terms, Transurban would
ScoMo mulls JobSeeker lift
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Calls to scrap NSW stamp duty reforms
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Elon Musk muscles in on NBN’s turf
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WA budget rides the iron ore boom
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Lifting JobSeeker is a national economic priority
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Can’t raise JobSeeker, can pork barrel retirees
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Real estate parasites demand tax deductible mortgages
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Coalition flags HECS-style loan scheme for businesses
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Another Gonski fail: Private schools guzzle taxpayer funding
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State governments buy a year of capex growth for $50bn
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Victoria: the home of public sector fat cats
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Auditor General to probe JobKeeper rorting
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