Copy and pasted extract from Barnaby Joyce's newsletter
GROSS DEBT$235.04 billion DEBT PER AUSTRALIAN$10,446INCREASE IN MONTH$5.3 billionCURRENT DEBT LIMIT$250 billionas at 23 March 2012www.aofm.gov.au
Sent to me by a friend to update me.
How can they spend so much money in such a short time and when they came to power there was a 20 Billion credit in the bank account
Where has the money gone ............
The figures posted in this simplistic fashion don't reveal the true position. If you're buying a house (after getting a major loan, because you have a steady income), I could say you're technically insolvent, because you owe, say, $800,000 + interest, and you don't have that value in assets, if a fire sale took place tomorrow.
A countries "Debt" is divided into many parts. There's corporate debt (companies borrowing money to finance buidlings, equipment, etc) - private debt (credit cards, mortgages, consumer loans) - and then there's public sector debt. The above figures do not identify exactly how this "debt" figure is arrived at, and what it is owed against.
Public sector debt is monies borrowed by the Govt to fund infrastructure, or to make up budget shortfalls created by spending on pensions, welfare, public sector salaries, etc. This is called "deficit" spending and is not usually a good idea. However, in recent times, it's recognised that some deficit budgeting is required by Govts, to smooth out financial ups and downs.
The "debt" owed has to be balanced against tax revenues, and income from Govt owned assets. These are long-term incomes, and a nations public "debt" only becomes a problem when the economic situation deteriorates, and the Govt's income falls. This happens when an unplanned economic disaster happens, unemployment rises, and tax revenues fall.
We are in a very good position in Australia at present, with huge long-term earning facilities in place, such as mining of ores and coal and extraction of natural gas. Many of these projects are 25-50 year projects, and they are going to yield vast amounts of wealth for the nation.
The two problems facing Australia is to ensure that the wealth created is used prudently, with infrastructure improvements - improved water, energy and power supplies secured for the long term - and that the nation doesn't fritter away it's wealth on Chinese consumer rubbish, and short-term useless expenditure such as expensive "boys toys".
The third problem is one that is sneaking up on the Govt, and which needs to be addressed by some gutsy politicians. Long-term tax revenues from companies and corporations are falling, as these businesses find more and more ways to (legally) avoid paying tax.
The tax revenue burden is falling more and more on small businesses and wage earners, that do not have the luxury (or the generous tax laws) that allow companies and corporations to avoid tax - via trusts, offshore tax havens, subsidiaries, and the 1000 other tax-minimisation efforts they employ, via highly-paid accountants/lawyers.
The "debt" problem only becomes a problem when a countries inability to meet debt repayment schedules arises. This is what has happened in Europe with Greece and Portugal and Spain. They borrowed money that was not invested in areas that could generate wealth, so the borrowed money could be repaid.
As one Greek bloke noted - "We bought BMW's off Germany and sold them tomatoes in exchange". Not a good way to operate. BMW's are scrap of little value, in 10 yrs, and generate no wealth.
If the Greeks had invested in wealth-generation projects, they would have not ended up where they are. They also have a corrupt public service, with tax collections "optional" for most Greek businesses. Thus, the Greek Govt cannot collect enough tax revenue to fund its debt, and bankruptcy follows.
We are still fortunate enough to have Govts that operates within reasonable expenditure limits. The NBN is a good investment, it will be of major benefit to the nation for the next 30 or 50 years, and result in lowered costs in many areas.
The fact that debt is "expanding" is merely because the economy is expanding, the population is expanding, and inflation is still a few %. All these figures combine to produce "expanding" debt, as well as expanding money supply.
If the Govt's income was contracting seriously, and unemployment was rising, and no business investment was taking place - then, yes, we would have to have serious concerns about the level of debt - and take steps to reduce it accordingly, or extend the repayment time.
"Debt" taken as a stand-alone figure is very misleading, and used to frighten people into believing that the current Govt is incompetent. It's a standard right-wing American fear tactic, usually accompanied by the veiled threat that "communism" is soon to follow all this "unpayable" debt.
I don't have a problem with "debt", but I do get annoyed by people making fear pronouncements, based on selective figures culled from the overall picture.
Well thats a pretty good sumation of how National debt can be looked at BUT ............where has the money gone............where has it been spent ..........we need answers to Labours wasteful attitude with our money..........
Clay, if you look again, Aaron said "The figures posted in this simplistic fashion don't reveal the true position."
Also the figures quoted are GROSS debt. Who's gross debt ? Most economists do not use gross debt because as Aaron said it does not paint a true picture.
It could be Australia's gross debt which would include industry's borrowings , home mortgages, your credit card debt etc etc.
It is a bit of a vague statement to scare the pants off you and it worked.
Do not believe all you read especially circulating emails.
Everyone seems to have adifferent definition of the word DEBT..........now its all well and good to simplify the descriprtion but I want to know if its debt...... then it is debt.... but it has not been defined enough at this pont ........Also I did not read the information in an e mail but have taken some notice of the comments made by justme and also by Aaron
Its common knowledge that this Labour Govt have borrowed heavily .......and if I am right someone knows ....how much ....and what has happened to the money so borrowed
Do you know fwed and if so and without guessing or trying to be smart about it give us all a proper definition and with a suitable and sensible explanation
If you can not do this then we will have to ask someone who can
All I ask is a simple statement of truth ...........
what you are saying is that Labor (and Liberal), should tell industries, businesses and private individuals to stop borrowing ....(for example)....to do market and product research, develop new industries, extend their businesses, buy equipment for their business, take a morgage out to buy a home, to use their credit cards.
You really should re-read Aaron's comment above and below, as it is one of the better comments on this forum. I say this even when Aaron get's stuck into Whitlam who I did and still do support - Whitlam gave us medicare and access to Universities on ability and not money. Aaron's comments on debt are valid.
This is exactly why I post such messages, to stimulate debate and awareness in the hope that it will become mainstream discussion.
The email address for the source of the data is included to check details;
I think the numbers are scary by any interpretation, considering it's us left on the hook either directly or indirectly.
Thank you all for your interest and replies, please keep it up.
I don't particularly want to get into the full debate on National Debt, because I see little point in using up an enormous amount of research time to follow a debate that just finishes up a Labor/Liberal support slanging match. justme raised the matter regarding National debt. Aaron goes straight into a very well put together explanation of the break up. The excellent post is then totally destroyed by finishing up with the statement that the whole bebate is a standard right wing American fear tactic. It is NOT. It is a genuine question regarding a current Government's spendthrift attitude with Australia's short term bonus of unearned income. We are spending a borrowed $40+Billion on an NBN when we can't afford to borrow 14 to $16 Billion to pipe water from the North West to the East Coast to make us the best water supplied Country on Earth. It is a scary, not right wing American, fact. Just look at the unemployment figures. The figures are a little higher than they were when Howard left, BUT we now have 20,000 more Commonwealth Public Servants. Simple interpolation tells you that the public purse is paying a non productive 20,000 people to replace over 40,000 real jobs. Not long after getting into Government the present regime borrowed around $3 B to pay the 1st years cost of the $30P/W single pension increase, reborrowed again in 2009. 10, 11 & again this year. That makes a total of $15B by the end of this year. All borrowed + interest with not 1 cent repaid. Whenever anybody says that Gillard got into power by lying, the immediate reaction is that Howard lied. Just imagine if O. J. Simpson's legal team had said immediately after the reading of the charges, the charges against Simpson should be ignored, because Ted Bundy had killed a lot more!!! You & a couple of others constantly rant that these things are only raised to scare the poor simple minded general public. You intimate that the general public (unlike youselves) are brain dead & should not be frightened by reports of an inept Government.
Innes - Well, just for a little comparison, without the fear factor - I, and you, too, most likely - lived through those dreadful days of Gough Whitlams profligate, "spend, spend!, SPEND!!", days of 1972 to 1975.
Gough Whitlam blew money like it grew on trees, and cared not a whit where it came from or how it was to be repaid. He gave us 17% inflation, tripled the size of the Australian economy from $6B to $20B in 3 years with his profligate waste and borrowings, and the price of the average household item tripled in purchase cost in those 3 yrs.
It was an utterly appalling time to live through - yet we lived through it, and we survived - and the next Govt reined in the spending and corrected the wastefulness on arts and all the useless garbage that Gough supported.
In that context, the current debt levels, inflation levels and employment levels are pretty good. Now, I'm not saying Wayne is the worlds greatest Treasurer (we've already had him), but I believe he's basically a fairly decent bloke trying to balance the books.
Now, if anyone tries to tell me that Tony Abbott is an economic genius, with all the answers in his pocket diary, then excuse me if I break out into peals of laughter. The man is an economic buffoon, and even Costello admitted as much.
The NBN is a long term investment in the future of our country, and I'm in agreement with it. It will speed up medical help & communications enormously, reduce costs, and it will be a national asset.
The piping of water from the NW of Australia to the East Coast is not economic and never will be. It would be viable to tap the Great Artesian Basin inland and pipe that to the East Coast cities, but possibly, more dams would achieve a better result. You've certainly had some substantial amounts of water going to waste in QLD and Northern NSW in recent times.
To say that public servants are non-productive isn't particularly correct. There is always a certain number required to action Govt requirements. Perhaps you're confusing unnecessary Govt red tape and regulation, that is costing us far too much. I don't have a problem with reducing that area of Govt.
I lived through the Whitlam years as well - and don't agree about wasteful spending on the Arts - in fact it is generally agreed that that is when the Australian film industry first got off the ground...thanks Gough!
Agree with you Kaye, about Whitlam, he did a great many things for Australia that were good but we never hear about it. So your comment is valued.
innes it is not a right wing USA, it is a fascist USA, it has thrown away its rule of law and habeas corpus - it can no longer proclaim to have freedom and democracy, as it oppresses it's people in the same manner as other fascist regimes.
Three new laws that support this statement are:
***A recent five-four supreme court ruling decided that anyone can be strip-searched upon arrest for any offense, however minor, at any time.
***the NDAA, which lets anyone be arrested from anywhere in the world forever (no trial) at any time.
***HR 347, the "trespass bill", which gives you a 10-year sentence for protesting anywhere near someone with secret service protection.
Hence, any comments that Aaron made in relation to the US would be valid.
One last comment - re NBN....it is infrastructure....it is a good thing for Australia and is an investment for the future of Australia. We are a wealthy nation who has just signed an agreement with China to exchange currencies, so are likely to be wealthy for a long time - so I guess what I am saying, is....we can afford to put capital infrastructure into Australia. China has a handle on it's wayward growth and has reduced it to a sustanable level. Australia may not be in a boom but we are running along, nice and steady which is even better......... so........ all good!
Our economy is being managed very well and Australia will survive - government infrastructure is one way of ensuring that. There will be a downturn in retail shop outlets but that is part of the new world, I am afraid. Online shopping is rising quickly.
There will definitely be turmoil in the world.....the US will probably lose it's world currency status (eventually) which will mean that they will have to actually manage their economy and affairs properly and start living within their means. Ditto for the UK and Europe will be rocked for awhile BUT they will actually unite more closely and there is a probability that they may even do better than the US and the UK in the end.
todays spin to take your minds off the Qld disaster
-----------------------------------------------------------------------------CASH bonuses of up to $100 per child for families and $250 for pensioners will be deposited in voters' bank accounts within weeks as the Gillard Government fights a public backlash over the carbon tax.But taxpayers will be forced to pick up the tab for a multi-million dollar public education campaign.The carbon tax is tipped to increase household bills by $10 a week when it is introduced on the nation's top 500 polluters from July 1.The lump sum bonus payments will be rolled out from May, ahead of the introduction of the carbon tax and on top of a $300-a-year tax cut for six million Australians earning $80,000 a year or less.source
What is the betting that the above not only gets paid out to people living overseas on pensions like the stumulus and the $900 cheques for tax payers but also is borrowed monies as we are in debt up to around 200 to 250 billions borrowed overseas at unknown interest rate. Government borrowings debt not personal or company for the rusted ons of this world who hate to admit their heros have clay feet - not you Clay dear.
Before paying out the above stumulus Labor Government should have had Centrelink dividing who lives here and who has moved back to country of birth taking age pensions because they sent out the stimulus to them and wasted millions along with $900 cheques to people who had returned home too so ATO needs to update surely must keep record of whom is no longer putting in a return etc. Public Service heads should be on top of this in reality but checks must be made by the elected government who spend the taxes we all pay.
History shows that every Labor government in Australia be it Federal or State borrow too much and wastes much of it on silly socialist schemes.
As they are now doing on how to cut down how much energy we all use whilst thepower cos etc are saying we are not using as much - missing the obvious - people are trying to cut down the power bills! Now talk of initiatives to power co's to try to get us to use less power so they dont have to spend more money on upgrading 5 billion over 5 years and this is what is upping the prices green politics actually, renewable energy which will never carry the base load, but they ingore that whilst ignoring the fact carbon dioxide is not the gremlin at all as they forgot to include the medieaval period of cooling in their modelling of AGW as well as ignoring Siberia in heat collectors for info - well too cold would make the whole thing nonsense - indeed indeedy. read this story below and wonder if our part of the world seriously has lost its marbles. Or just another left wing scheme debacle report we are paying for too and another debacle to come.
The term you used "silly socialist schemes" is the same sort of 'spin' that fascist turn out.
Labor fund the average Australian BigVal and not merely the wealthy elite, so it costs a little more.
Services and benefits to the average Australian is important and does, in fact, keep the economy turning over.
The services and benefits to the average Australian are what you are calling "silly socialist schemes". So you propose no spending and no provision of services to the average Australia and have the gold mine that GST represented, be kept aside.......for what?!? The Average Australian pays a whole whopping 10% EXTRA in taxes....WHY are we not allowed to have that used for the betterment of the people who pay most of this tax and who pay most of the income tax of Australia.
That is why we pay taxes. To provide benefits to Australia - services, infrastructure, roads, etc. To do it properly you need to have debt. Just about every person in Australia has a debt of some sort to run their affairs, so does the government. T
To do large infrastructure, the government needs to go into debt. Then it comes out of debt and may decide to put more of our tax money back into Australia and go back into debt. It is how things work.
The federal government is in considerable debt, so what major infrastructure has it produced?
The Queensland government was so far in debt it was better to lose government and did.
Oh! Come ON Naut......Queensland was beseiged with one natural disaster after another. What, you think that everything gets better by magic and you just wiggle your nose or something. It cost money Naut, a bloody lot of it. So yes there was a lot of infrastructure undertaken, to righten the damage done by one disaster after the other. I suppose you are one of those that screamed and shouted about paying a few dollars in tax to help out our fellow Australians!!!!
Now, federal government..are you sure it is the government that is in considerable debt or the whole nation. The government debt is okay, as far as debts go, it is funding the NBN and it is funding the Carbon Tax (designed to make those that create the pollution to pay for it and not leave it for Australian's to pay for sometime in the future - it also encourages those heavy polluters to come up with new and innovative ways to reduce their pollution - pretty good really). Private debt (industry/business/individual) is as you say "considerable" and just could be our downfall.
Back to government debt - Infrastructure took a back seat whilst the previous government was in, so just repairing and upgrading roads and other aspects of our nation BACK to an acceptable standard costs lots of money. Now don't tell me local governments do many roads because you then have to ask where they get their money from (yes, loans from the federal government).