A respected business figure rang this morning and opened the conversation with the following prediction: “put a note in your diary for yesterday that says ‘one term wonder'”.
Kevin Rudd is certainly imperilling his government by embarking on an extraordinarily reckless policy prescription which appears to be motivated by the base political considerations of wedging Malcolm Turnbull.
At a time when we need to encourage confidence and project financial strength to the world’s lenders, the PM is out there terrifying the horses with completely over the top rhetoric and spending binges that imperil our AAA credit rating.
Here is little Australia with its $1 trillion foreign debt, hugely indebted households and an enormous current account deficit suddenly surrendering its greatest strength — a relatively small but strong federal balance sheet.
What is equally remarkable is that normally sensible economic commentators like Fairfax’s Ross Gittins are still pedalling the line that we have “completely eliminated the federal government’s debt”.
The Rudd Government inherited about $50 billion in outstanding debts and in May last year Wayne Swan announced this would be increased by $25billion over the next few years. This expansion to the balance sheet was fine because the budget remained strongly in surplus.
However, to suddenly reveal the Feds will be producing deficits of $22billion and $35billion in the current and next financial years respectively, is an almighty shock that was largely avoidable.
By all means try to encourage infrastructure investment but this year’s $22 billion deficit is entirely caused by the $10 billion December welfare hand out and the $12 billion splash proposed for next month.
This money-for-nothing approach is precisely what got the world into this mess in the first place.
Welfare spending was already budgeted to be $103 billion in 2008-09 and will now top $130 billion. The Rudd Government should be trimming the crazy middle class welfare of the Howard years, not building on it.
So, will the credit constrained world lend us the money?
The latest $400 million Federal bond issues was announced on January 21 and it was a success with investors lending 12 year debt at just 4.06% a year.
The Australian Office of Financial Management revealed the scary new borrowing program last night:
“Over the remainder of the current financial year (that is, to end-June 2009), two Treasury Bond tenders will be held most weeks (generally on a Wednesday and a Friday) with the amount offered at each tender normally in the range of $500 million to $700 million.”
How on earth can the government start borrowing more than $1billion a week from private investors when it doesn’t yet have the legislative authority to do it?
Malcolm Turnbull is absolutely right to oppose this spending spree because the end game of what Rudd hysterically calls an “unfolding national and international economic emergency” is that sovereign states will default or need a bailout from the IMF.
We need a detailed analysis of the Federal fiscal position before Labor should be given any authority to spend another dollar, let alone $42billion.
Today’s press should have been all about interest rates hitting record lows and households saving $10billion a year servicing their $1trillion debt. Instead, we just got unnecessary political conflict, frightening headlines and a huge foreign borrowing challenge.
Peter Costello completely nailed the PM in The Age today pointing out the sheer hypocrisy of the self-styled fiscal conservative turning into an unreconstructed Whitlamite.
Come back Peter, all is forgiven.
Our AAA credit rating by who the same agentics that gave AAA credit ratings to the mob that invented the sub prime mortgage
You are joking son the AAA rating is a worthless as Costello,its a con,what a waste of a column.
The vitriol in these comments is just jaw-dropping. If you want to disagree, you could at least do so civilly, if not with rational argument. You lot should confine your subscriptions to GreenLeft Weekly if you only want to read stuff you agree with. Thank heavens Crikey still maintains some semblance of diversity in opinions.
Maybe you can answer the question JamesK that Stephen Mayne has ignored: why has big business aplauded Rudd’s package ?. And while anyone is free to criticise this package-neither Mayne, Turnbull or indeed Peter Costelo offered an alternative (considering Turnbull & Costello were part of a government that helped cause the situation-was Costello telling the truth when he constantly boasted Aussies had never had it so good ?)
As for Israel’s appaling attacks on Gaza: it’s important for Jews to point out that the powerful Jewish propaganda bodies throughout the world do not speak for those of the Jewish race as they imply and that their tired old “anti-Semetic” attacks are further proof of exagertaed claims and lies-given that the vast majority of Israel’s Jewish citizens have had Semetic blood bred out of them for centuries being mainly of East European descent. The majority of Israeli citizens and those in Gaza under attack are Semetic though.
The Zionist government not only steals land-it appropriates words.
Didn’t Peter Costello boast that the Liberals left office with the government in surplus. So why the comment “The Rudd Government inherited about $50 billion in outstanding debts”
You mean the Liberals really did lie to the poor Asutralian electorate
Stephen is just showing his Liberal bias here. What else could Rudd and Co do. The actions in the 1929 disaster were all wrong and the solution to this one which is a copy is to do what Rudd and C0 are doing. The situation now has no resmblence to the Whitlam period which was due to the first oil shock and is just matter that the Liberal Party have always pushed to demonise Labor. Governments must spend to counter recessions. As one who grew up in the last one I really do not want to see a repeat of 1929 again. I thought that Mayne had some sense but that illusion has been destroyed