Australia's Budget Predictions vs. Reality

Every year, Australia’s politicians make the same promise. A graph of promises vs reality makes a farce of it all.

The above graph, courtesy of news.com.au, highlights the difference between government budget forecasts and what really happened.

Australia has not had a surplus since 2007-08 when the Rudd Government spent heavily to insulate the country’s economy against the global financial crisis.

Since then, successive governments have released estimates of when the budget would be returned to surplus but each year this date has been pushed further back.

The 2010-11 budget suggested Australia would be in surplus again in 2012-13 — five years ago.

The Turnbull Government now expects this to happen in 2020-21.

Here's a clue. It won't happen.

The key to budget forecasts is to not make them but brag about what happens, no matter what happens. Trump provides a perfect role model.

Mike "Mish" Shedlock

Comments
No. 1-8
Stuki
Stuki

The amount of debt always matters. The exact mechanism by which it does, and the exact effect it has, may differ. But A taking ownership of a real good from B today, in exchange for promises of returning a real good of higher value to B at some future date, has real effects.

At it’s most fundamental, the larger the combined amount of outstanding such promises exists, compared to the size of an economy’s productive output; the more of the economy’s resources are shifted from production, to simple “promise enforcement.” Which inevitably slows down growth, increases animosity, and encourages greater spying and meddling in the private affairs of others.

All an intervening sliding scale currency contributes, is an obfuscation mechanism. Making it a bit harder for the two parties to track the current, hence future, status of their transaction. And hence easier for well placed third parties to steal some of As and/or Bs value on the side, without this being too obvious (to more than one in a million, per Keynes back before he traded economics for arbitrary cultism).

EriAjvazi
EriAjvazi

BitCoin accepted or not?

Lately, the term BitCoin has been circulating all around, but do we actually know anything about it?
On a discussion with the students of AAB College and other attendants of the discussion, it’s been discussed about BitCoin as a digital currency and whether it is accepted or not.
The panel consisted of 4 wise men, including here: The governor of the Central Bank of Kosovo, a professor, an analyst and a BitCoin user.
‘’It is a technology that was founded 7-8 years ago. It is indeed a complicated process for those who don’t deal with technology.’’
‘’Years ago, you saved a value by investing it into real estate, but now people want to invest in something which is independent from the government, state or banks.’’
‘’At first, BitCoin was distributed for free to around 100 people and now everyone wants to buy BitCoin. Is this a good thing? I don’t know. I am fearing it, but also it is not cheap, neither fast enough. 1 BitCoin equals to about 15000 euros.’’
The Central Bank governor said: ‘’We released a press conference where we warned that we will not be responsible for people’s investments in BitCoin, because these are individual risks.’’
Meanwhile Professor Rexha said: ‘’The demand and profit is incredibly huge, but there are risks.’’
‘’Knowledge on this field is needed when it comes to those who want to invest in BitCoin, because it is a future discovery. Also, you should be careful because by not having knowledge, you may contribute to terrorism or money cleaning.’’
‘’It can be considered a global platform. Until now, 600 billion dollars have been invested in it. It can’t either be hacked, because it costs a lot more than buying a BitCoin.’’
When asked if governments can stop it, he said that each government has its own interest, but generally they are not including themselves much, yet. Meanwhile, the Central Bank of Kosovo governor said that they will react as the Central Bank of Europe does.
‘’As long as there’s a lot of request, there is no problem, but in the moment of decrease, then there will be a big risk.’’

Realist
Realist

If debt doesn’t matter, then I guess it’s okay if the US adds a trillion per year forever. However, I suspect that at some point in the future, it will matter. Though I have no idea when that will be.

KidHorn
KidHorn

The amount of debt doesn't matter as long as it's denominated in your currency. Japan has proven this.

Realist
Realist

Not much new here. I’m not sure why Mish is focused on Australia so much,when they are in much better shape than the US debt wise. US govt debt per citizen: 63,000. Aus govt debt per citizen: 14,600 (US$).