In terms of revenue changes for the 2008-09 budget, here’s a ranking of how some of the key policy changes weigh in:
Means test baby bonus: $50 million
Removal of condensate oil excise exemption of North West Shelf: $564 million
Alco-pops tax hike: $640 million
Increased Reserve Bank dividend: $814 million
We’re been deluged with alcopops coverage, but why isn’t a completely irresponsible raid on the Reserve Bank being debated?
Fairfax’s Ross Gittins produced a hard-hitting column today labelling the spending cuts as “pathetic”, the claimed savings as “misleading” and also pointing out how important the Reserve Bank raid was to the figures.
It was in stark contrast with Alan Kohler’s gushing praise on The 7.30 Report last Tuesday night.
I think it’s a bit of an old-fashioned razor gang budget….all the new things in this Budgets are cuts. It’s largely, I think Lindsay Tanner’s Budget more than Wayne Swan’s Budget, because they have delivered all of the spending promises they made, plus another $2 billion in cuts, that’s $5.3 billion of spending promises offset by $7.3 billion in cuts. Which, I think, will surprise a lot of people that they went so far in their cutting. I think it’s going to be well received in the markets… it’s a remarkable job.
The government’s budget sales team has been subjected to some sustained questioning in recent days, most notably Wayne Swan’s 20 minutes on Meet The Press yesterday and Lindsay Tanner’s KGB interrogation with Alan Kohler, Stephen Bartholomeusz and Robert Gottliebsen on Business Spectator.
Both were interesting interviews but it is disappointing that no-one has yet asked whether our Reserve Bank has enough capital to cope with the global liquidity crisis when the Rudd Government was clearly desperate to come up with as big a surplus figure as possible.
Here’s a simple question for Brendan Nelson to ask Kevin Rudd in question time:
Given that Australia’s central bank has less foreign reserves than the likes of Iran, Libya, the Philippines, Peru, Denmark, Malaysia, Poland, Argentina, Mexico, Thailand, Romania and Indonesia, was it prudent to extract an additional $814 million from the Reserve Bank in 2008-09 at a time of unprecedented central bank intervention in our global financial system?
Whilst the RBA raid was reckless, the government deserves credit for ending the excise holiday on the North West Shelf. This was a brilliant move that improves both the budget surplus and our current account position given that 90% of the project is foreign-owned and the likes of Exxon, BP, Shell, Mutsui, Mitsubishi and Chevron are all making a fortune.
Woodside CEO Don Voelte, a hot-tempered Nebraskan, should stop moaning. Woodside shares soared another 4% to a record $65.77 in morning trade and Voelte has made more than $50 million from his move Down Under.
Check out this expanded list on foreign ownership of Australia’s resource projects.
Who does own the Reserve Bank of Australia? It’s a legislative entity I presume. Then again the value of the financial assets they hold might be subject of international market forces? Is that your point? Their website refers to 1959 Act and “Its assets, which include Australia’s holdings of gold and foreign exchange, amounted to around A$132 billion at 30 June 2007. The Bank is wholly owned by the Australian Government, to which its profits accrue.” One does wonder what influences act on those assets (like price of gold, foreign currency value?), where the rubber hits the road.
The Reserve Bankind System and Fiat currencies present problems far in excess of the simple picture that we are offered. A little research about the role and ownership of Reserve Banks will give the reader the fright of a lifetime! Just ask Swan or Rudd “who owns Australia’s Reserve Bank”? And see them sh*** themselves trying to give an answer. Ahh … our collective blissful ignorance.
It may be a simple question but it would also be a simpleminded one as well. There are a multitude of factors, most of them quite obvious, as to why Australia’s situation is quite different from “the likes of Iran, Libya, the Philippines, Peru, Denmark, Malaysia, Poland, Argentina, Mexico, Thailand, Romania, and Indonesia”. But then again Brendan Nelson has shown a talent for asking simpleminded questions so maybe he should just go ahead and ask. It couldn’t be any stupider than the question he asked himself about petrol taxes.
The Kid From Bondi has taken in too much sea water. Please do not foul discussions with conspiracy theory nonsense.