Nationals Leader in the Senate Barnaby Joyce writes:
It is game, set and match and the Rudd Labor Government doesn’t have a clue what they are doing.
In their first 12 months in office we have gone from a $21.6 billion surplus to a deficit and if it’s not apparent now it will be once we take into account losses in the value of shareholdings in government-based funds that have not been booked since September 30.
What is particularly galling about this problem is that we are in a deficit by reasons of an ill-conceived $10.4 billion stimulus package which will have a negligible effect on stimulating the economy. Australian Christmas spending will not kick-start the global economy.
If we had instead spent the funds on infrastructure projects we would experience an increase in activity as firms prepare to build the project, a stimulation in wage and salary income during the construction of the project, an income stream from the creation of the project and it would result in an asset to sell to recoup the funds as required at a later stage.
Unfortunately in place of this we have $8.7 billion to appear in banks from December 8, to disappear into imported electronic goods, alcohol and some gambling. The more prudent will save it which, of course, means there is no stimulant effect as the money is locked up.
I think everyone can make the call on which process would be conducted by a responsible government and it’s not the latter. Especially because pensioners’ incomes will be as inadequate as they are now and we will have to meet the added expense of foreshadowed increased numbers of unemployment benefits.
The deficit is not a surprise and was not dreamed up in the last week.
At Federal Council in October I said the Rudd Government was driving the budget into deficit. At the front end the effects may not be so pronounced, but later on the effect will be an increase in the interest rates that everyone has to pay because of Labor Party mismanagement.
It is ridiculous that Labor talks about deficits during the cycle as if the cycle runs over 12 months. Yes you would probably expect to end up in deficit, but not in the first year. Not when you started with interest rates as high as Labor put them and with as much money in the bank as the Coalition left them.
This will go from being a global problem to being a global and domestic management problem. The Australian Federal Labor party deficit will compound with the state Labor governments’ complete indolence in management and the monstrous debts that will be lodged between both forms of federal and state Labor governments will suck the rebound out of the economy.
While we are in the market for credit any person loaning us money will be very interested in any contingent liabilities that are present in working out a margin on what to charge us for funds. Labor have well and truly stitched us up with that, with their unlimited guarantees to the banks.
ENDS
Have Your say!
November 30, 2008 at 1:23 pm
Well done Barnaby – I have been severely disappointed with the lack of analysis of the stimulus package and it does deserve criticism for it’s wasteful and poorly directed nature. Very few commentators have woken up to the risks the government has led us into with their accross the board guarantee – they need to sort the mess out ( guaranteed sector versus non g’teed)and they also need to introduce some accountability measures on how those guaranteed deposits are lent out and to whom!!!There is little incentive for many of the institutions to be as prudent as they should be.
Similarly so far there has been little critique of the extra money for the states announced at COAG; in terms of how much of the money will go to where it is needed; as opposed to building up layers of beaurecracy which the Labor party is really good at.
The Federal government has been poorly advised, led by the two beaurecrats who wanted to bignote themselves . Stevens by putting rates up during the election campaign and particularly Henry who one suspects was quite smug when his memo was leaked. I have not heard his recent views about politicians raiding the kitty for special projects and diverting resources away from other industries. Perhaps they are changed now that he has new political masters. (I do not feel as though I am criticising the RBA with the benefit of hindsight, as I had a letter to the editor published last year which said that I thought they were going to far too fast given the threat the sub-prime debacle posed).
I am willing to have a punt this time and suggest the government and the RBA combined run a risk of going too far too fast again given the mooted further rate cuts and stimulus packages.