Let’s have a little look at what the world’s best treasurer, Wayne Swan, is babbling on about…
You probably know the news by now. That is, Mr Swan has ‘officially’ abandoned his budget surplus forecast for 2012/13. As far as we’re concerned, it’s not actually a big deal. What’s more galling is the way this government has completely mismanaged the process and/or lied about the budget’s progress.
Firstly, the whole surplus target thing was a political tool aimed at highlighting Labor’s economic credentials. Australia’s voters have long viewed Labor as a party with little spending discipline. So in an attempt to counter Liberal Party criticism, one of Labor’s strategies this year was to fight tooth and nail to deliver a budget surplus.
A major part of this strategy was to implement the mining super profits tax. Anyone with half a clue as to how markets work could have told you that the governments’ projections were completely unrealistic. The supposed budget surplus for 2012/13 was therefore never going to happen.
A few months ago, the Australian government realised this too. They obviously strategized about the best way to tell the public that the surplus was no longer there. So early this month, they leaked the news that they might have to abandon the surplus because of lower commodity prices and lower than expected tax revenues.
Then, our compliant media followed up for a few weeks saying how running a surplus was irresponsible economic management anyway and a move to a deficit was the right thing to do. Once that message filtered through into the community, the government struck…
Yesterday, a few days before Christmas when the public is more concerned about mince pies than budget details, Mr Swan fronted the cameras to tell everyone what they already knew. But in a spin that only a politician can provide, Mr Swan has this to say:
‘If the worst thing that people say is that we got the economics right again but fell short on the politics, I say, well so be it.
‘At the end of the day I don’t care about the political outcomes, I care about the economic outcomes.’
Is this guy for real?
Imagine you run a division of a large business. You forecast revenues one year out based on a number of supposedly well thought out assumptions. Those assumptions turn out to be vastly wrong. But because you’re expenditures are largely fixed, you can’t cut costs anywhere without endangering the whole business. So you make a loss for the year.
Instead of going into the board room, cap in hand, and breaking this news to the Chairman, you defiantly tell them it’s the right outcome for the business and that you got the economics right.
Good luck surviving that board room meeting with your job intact…
We know running a country and running a company are two different things with different objectives. Mainly, running a country involves spending other people’s money and only being accountable once every three years, at a time of your choosing. So it’s an unfair comparison.
But we still think Wayne Swan is a hypocritical fool. Following the largest boost to Australia’s terms of trade (and national incomes) IN HISTORY, the world’s best treasurer managed to deliver a deficit of 2.2% of GDP in 2009/10, a deficit of 4.3% of GDP in 2010/11, and a deficit of 4.1% of GDP in 2011/12.
Can you imagine what the deficits will be when times are really tough, as we think they’ll be next year? Oh, well, as long as Mr Swan gets the economics right…
This Christmas, ignore that buffoon Wayne Swan and all his fellow politicians the world over. Surround yourself with friends and family and enjoy it like it’s your last.
Merry Christmas, see you next year!
for Markets and Money
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