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Gillard’s last stand & Wonky Wayne and the Budget Factory.

April 25th, 2012 · Greg Atkinson · 37 Comments

Foolishly during Kevin Rudd’s Australia 2020 Summit a few years ago I thought that the political circus in Canberra couldn’t get any more ridiculous.  Sadly I was wrong. The Gillard led government is now doing its very best to destroy what little respect the public have left for politicians and Wayne Swan is sure to produce another work of economic & finance fiction – the 2012 Federal Budget.

Julia Gillard to me is like a red chameleon that can’t change colour but thinks it can and believes it is always well camouflaged.  At times she wants to appear greener than a bunch of Woodstock hippies, but alas she is still as red as Chairman Mao’s little book.

At other times she tries to change to business blue or farmer brown, but again she has only changed her appearance in her own mind.  Few people are fooled and most see Julia for what she is:  a desperate Prime Minister who will go down in history as one of the worst Australia has ever had the misfortune to be saddled with.

In days gone by Gillard would have already been toppled from power,  but the  Labor Party’s talent pool is so shallow that even the algae at the bottom is drying out.

So Gillard holds the highest elected office in the land simply because there is no real alternative apart from Kevin Rudd.  What a choice…a bumbling P.M. or an egomaniac ex-P.M.  How sad is that for the Australian public?

Julia Gillard will not make it to the end of 2012 as Prime Minister and I suspect she knows it.  If she truly wanted to do what is best for Australia she would call and election to give the public a chance to make a change if they so wish.  However she seems intent on making a last stand and every day she remains in office, the more damage is done to the Australian economy and our international image.

Generally I try to avoid talking about Australian politics when overseas, however if pushed I cunningly attempt to change the subject to either The Wiggles, Kylie Minogue or the Australian cricket team. This normally works well.

For example if someone asks me who the Prime Minister is I answer “Well it should be Steve Waugh” or “Isn’t it the Red Wiggle or “We don’t need a P.M, we have Kylie”.

Usually this works well, especially if people have had plenty of alcohol to drink. However a few months ago in Singapore my strategy came unstuck when a local business entrepreneur brushed aside my attempts to avoid talking about politics and proceeded to give a very good summary of the Rudd-Gillard saga.

As I sat and listened, I realised how pathetic our government must appear to overseas business & political leaders. The truth is we have a government that is simply focused on remaining in government and a Prime Minister who doesn’t seem to have the courage to resign.

We also have a government that has managed to take a surplus handed to them by the previous Howard government, spend it all, borrow billions and have very little to show for it.

Soon to make matters worse, Wonky Wayne and his Budget Factory will once again produce a federal budget that will demonstrate that the government’s vision extends only as far as saving as many seats at the next election as possible.

Last year I made this comment about Swan’s 2011 budget:

“Will productivity in Australia be improved because of this years budget? No. Will the Australian manufacturing sector be made more competitive because of this years budget? No. Will Wayne Swan’s 2011 budget help position the Australian economy to be able to better withstand the next economic downturn? No.”

Source: Swan’s lazy 2011 budget and Australian economic madness

After this years budget I guarantee you the same comments will be applicable. Swanny spends when he should save and saves when he should spend.

The slowdown in the Chinese economy is happening despite the best efforts of the China bulls to talk it away.  A few years ago we could have taken some measures which would be kicking in now and these could have provided a buffer for the period when commodities prices will be lower & mines start to close.  We are probably already in that period now.

It also amazes me that the Treasurer & Treasury appear surprised that tax revenues will come in less than they forecast.  Clearly they need to pay more attention to what is happening in the real world and less time tweaking their computer models.

There is only one thing more scary than an economist tweaking an economic computer model to suit an economic theory and that’s a politician who actually believes the model works.

Regarding Swan’s 2010 budget I wrote:

“Supporters of the budget will say I just don’t have a good grip on how strong demand is from China, but a quick look at the stock & commodities markets today suggests that I am not the only one not buying into Swan’s optimistic view of the economy.

Maybe the budget forecasts are correct, but I doubt it and the repercussions for the Australian economy if they are wrong will be severe.”

Source: The two speed economy, debt and the fantasyland federal budget

Well folks many of the forecasts have turned out to be wrong and on budget night we will find out what some of repercussions will be.  As per usual not much will be done to make the economy more competitive, most problems will not be addressed and the the new forecasts are unlikely to be any more accurate than the last ones.

That’s because the 2012 Federal Budget will be about getting as many Labor Party members of parliament and senators re-elected as possible.  The sad reality is that the government is not watching the economy but instead watching the Opposition and opinion poll numbers.

We can only hope that a few of the ‘Independents’ re-discover their backbones and that this madness ends soon…for Australia’s sake.

Greg Atkinson is the editor of Shareswatch Australia and the Managing Director of Ohori Capital. He is originally from Australia but currently resides in Japan. He can be followed on twitter via @GregAtkinson_jp


37 responses so far ↓

  • 1 Greg Atkinson // Apr 28, 2012 at 1:43 pm

    Even the mainstream media has had enough of the Gillard government now. “As Labor grapples with the extreme politics of minority government, it is becoming clear that, driven by desperation to stay in power, this government has lost its bearings.”

    From: Grubby politics destroys public confidence (AFR)

  • 2 Lachlan // Apr 30, 2012 at 10:32 am

    I agree with your sentiments Greg.

    The government made changes to the dairy industry here in QLD which resulted in much of it closing down. Now days much of our milk is imported from a couple thousand km away. And Australia which is a dairy exporter exports that much less. So we have less food security locally and less export earnings nationally. We have dairy products locally costing sometimes twice what they were ten years ago. And we have a few remaining diehards who get the same and at times less money for their milk as what they received ten years ago. A neighbour of mine described leaving his dairy farm to his kids as the definition of child abuse.
    However I have given up hoping for change from either side of politics… not that I ever hoped in the neo-Maoist, pseudo corporate fascist left.
    Nobody makes policy like this without a higher political agenda imo. We will keep increasing the magnitude of global economic imbalances and destroying local and nation state autonomy until people demand otherwise. When the lights go out on the USD financed prosperity mirage in the west then a majority of people will at least begin to care. That would be a start.
    As for the globalists I couldn’t care less what they want. It is what the bulk of individuals desire that counts down the track. People who care and act with regard to the sustainability of there own existence have the right idea.

  • 3 Lachlan // Apr 30, 2012 at 12:10 pm

    Many are saying too the left right paradigm is invalid. I think that it is not totally and nor are lesser levels of government and social organisation but rather for a time these have drifted off their courses with a greater tide of money, power and political desire. Advocates for socialism are disgruntled as are free marketeers. Anyhow for a time. We can’t stabilise this world any more than this universe. Changes happen we can never predict.

    Sorry if I drifted off here myself Greg 😉
    The dairy industry was not affected by the current fed government either. It seems to me neither party has done what people expected they would do (according their political ideals or pre election promises) in the last twenty or so years.

  • 4 BP // Apr 30, 2012 at 11:59 pm

    GA: “I fly my nerd flag proudly.”

    Here, borrow my light sabre… . 😀

  • 5 Greg Atkinson // May 1, 2012 at 10:50 am

    Lachlan we just don’t seem to have a national strategy but rather just drift along and hope everything will work out okay. The mining sector is a good example, there we have the states versus the commonwealth versus each other with not a lot of focus on how to manage our resources for the benefit of the nation for the long term. No political party has come up with a good policy for dealing with that issue.

    At the end of the day one of the big problems we have is that the standard of politicians we have is very low. Even if we put both the ALP and LNP together they would struggle to put together a Cabinet of truly talented people.

    How the likes of Peter Slipper or Craig Thompson ever made it to Canberra is beyond me. A pretty sad state of affairs really.

  • 6 Lachlan // May 2, 2012 at 6:49 am

    Yes that’s all true Greg. Also the trend towards politicians promising things which are popularly desired and then failing to deliver seems to be the norm and everyone knows it. I don’t really pursue or believe in perfect political scenarios or ideologies generally (even a perfectly free market will devolve in to monopoly, lets face it however I say some are obviously terrible to live in) but the current pollies rarely even placate the people in small ways. Are they that sloth and that protected they cannot do something we all agree is positive. It is pathetic. Instead we get poor actors like Julia that make everyone just moan and turn away or like Anna Bligh who just lost by a record margin such was her failure to convince the plebs. On the right, Tony flip flops too much.

  • 7 Lachlan // May 2, 2012 at 6:50 am

    Bitch over, happy face back on 🙂

  • 8 Lachlan // May 2, 2012 at 8:56 pm

    Clive Palmer has announced plans to run in the next federal election, in the Queensland seat of Lilley, which is held by Australia’s treasurer Wayne Swan.

    “I’ve done this because the Treasurer and myself both have clear different visions of where this country should go and what we should do,” Mr Palmer said of his preselection bid. ”I believe we should be getting bigger and stronger, creating more wealth for our people … he believes in a redistribution of wealth and making the economy smaller.”

  • 9 Greg Atkinson // May 3, 2012 at 8:39 am

    I have suggested in the past that the government & its policies had chopped about 10% of the stock market however I would revise that now and say it is closer to 15%. For investors the political situation at the moment is close to being a disaster.

    The Gillard government appears set to be heavily defeated at the next election so in many respects we are now in a policy vacuum which is not good for businesses and therefore not good for investors.

    The government in Australia seems intent on implementing many policies which have already sent the European Union into economic turmoil where unemployment is at historic highs. But of course it will be different..we have China.

    The reality is that Europe also banked heavily on the China but the China growth story won’t save the EU from many years of economic pain ahead.

    I fear Australia is about to go through the same cycle.

  • 10 GoWest // May 4, 2012 at 5:33 pm

    May the 4th be with you. Mind you I wish I had shares in Avengers Assemble.

    Swan’s motor mouth won’t get him out of this one – even the ABC is picking on him (3 years too late!). Also picking on single mum’s is a sure sign that the socialists have run out of taxpayers people’s money and are writing their memoirs ready to sail off to the sunset.
    The fundamental problem for Laborgreen was spelled out by the RBA this week when they had to step in with the biggest interest rate drop since the GFC because the economic growth has halved from their 4% growth predictions.
    Bob Brown has already resigned, so lets see how ruthless Julia is – the really smart thing would be to get rid of the carbon tax. .. We live in hope!

  • 11 BP // May 5, 2012 at 11:54 pm

    Use the Fourth, GW.

    Had immense fun with Star Wars… before the Death Star DRAgged its moorings and imploded! 😉

  • 12 Greg Atkinson // May 7, 2012 at 6:21 pm

    Meanwhile it’s pretty obvious that the Chinese economy is slowing and we don’t know how far the slowdown will last: Global Equipment Firms Hit as China Construction Slows (CNBC) http://soc.li/q9ygSAG

  • 13 BP // May 7, 2012 at 10:52 pm

    Yes… and Japan is apparently in worse shape, according to Dan Denning: http://www.moneymorning.com.au/20120507/why-you-should-be-watching-japans-economy.html#more-9546

    As an importer of energy, Japan may help insulate Australia’s situation if Chinese growth falters…

  • 14 Greg Atkinson // May 7, 2012 at 11:32 pm

    Well Japan imports energy from many sources and Japanese companies have interests in most of those sources. The demise of Japan Inc has been a fantasy of the West for around two decades but alas it is Europe and the U.S. that seem to have themselves in a twist now.

  • 15 BP // May 8, 2012 at 10:21 am

    “The demise of Japan Inc has been a fantasy of the West for around two decades…”

    As the demise of Australia Inc has been since 2007, I guess…

  • 16 Greg Atkinson // May 8, 2012 at 11:27 am

    Not sure the demise of Australia Inc has been predicted but certainly on this site I have suggested a slowdown & recession was very likely. China luckily dragged Australia though the GFC but if you check the stock market, listed company reports & even the housing market it’s pretty clear the economy in Australia is struggling.

  • 17 BP // May 8, 2012 at 11:37 am

    “…it’s pretty clear the economy in Australia is struggling.”

    Some states appear to be experiencing minor trauma. Nothing compared to most western economies, though.

    Good to hear you maintain confidence in Japan, Greg.

  • 18 Lachlan // May 8, 2012 at 2:40 pm

    Can we all agree the fundamentals for BRICs are better than for Eur periphery and USA by a mile. China has much of the globes industry, much of the paper and hard money, much of the worlds truly productive human beings, plenty commods and a population which will/can borrow and spend and likely benefit from currency appreciation at some future stage. Little Oz will have to ride along with this behemoth despite current poor leadership….you’d hope.
    Asia I think may prosper somewhat like post WW2 USA.

    I guess politics is always a risk.

  • 19 Greg Atkinson // May 8, 2012 at 3:11 pm

    With around 4 billion people in Asia I guess there is some room for growth! I haven’t ruled our Europe yet..there is plenty of room to grow east towards Russia although Western Europe looks set for a tough few years at least.

  • 20 BP // May 8, 2012 at 3:38 pm

    Lachlan: “Asia I think may prosper somewhat like post WW2 USA.”

    Looking at urbanisation and the growth of rail, China may be viewed relative to the US between 1850 – 1873, but its acceleration will be faster than nineteenth century America.

    I notice DRA’s condemnation of China as an imitator, rather than an innovator, but that model worked for Japan* for decades.
    Innovation came later… .

    * Apparently it worked for Jobs, too.

  • 21 Lachlan // May 8, 2012 at 8:02 pm

    I wouldn’t blame Chinese for imitating myself…in the free world we live in

  • 22 Greg Atkinson // May 8, 2012 at 10:15 pm

    Apparently people have not looked into what the West ‘borrowed’ from the East over many centuries.

  • 23 BP // May 9, 2012 at 7:43 am

    True, there’s great benefit in adoption of others’ initiatives. Rabid insistence on innovation, to the exclusion of enhancement of existing technologies, means continual wheel-reinvention…

    Given China’s remarkable economic growth it would be asinine to predict its demise simply because one doesn’t ‘like’ China. Some US and Brit economists seem particularly vulnerable to this way of thinking. Reluctant to see their own empires over-shadowed by a rising one, perhaps?

  • 24 ZombieDawg // May 23, 2012 at 1:42 pm

    Groan…
    I am just so SICK of these keynesian politicians saying how solid the economy is & how safe we are from the economic woes of the EU and USA.
    Same tired easily disproven political rhetoric.
    It’s clear they don’t have the slightest clue about the real world as they just don’t live in it !
    Retail Australia wide is falling rapidly, with business failures increasing. These ivory-tower pollies need to actually walk around town sometime and talk to real people ! People ARE learning the truth courtesy of people like Gerald Celente and they’re paying down debts and saving for the hard times ahead.
    This IS a global economic collapse and Australia is NOT magically safe Mr Swan !
    The mining sector is already sliding due to the domino effect of the China/Europe/USA economic disintegration. The Australian economic backbone is decidedly wobbly Mr Swan !
    Time to stop lying and pretending “she’ll be right mate” as most people no longer live on Fantasy Island.

  • 25 BP // May 23, 2012 at 4:17 pm

    There, there, Dawg. This should brighten your day:

    http://www.perthnow.com.au/business/wa-mining-magnate-gina-rinehart-now-richest-woman-in-world-making-nearly-50m-a-day/story-e6frg2r3-1226364516122

  • 26 Greg Atkinson // May 23, 2012 at 4:51 pm

    ZombieDawg if the Australian economy is truly booming then one wonders why tax receipts have fallen, why the government needed to raise the debt ceiling and why the ASX All Ords/ASX 200 are back at 2005 levels.

    Clearly the mining sector has done well, mainly thanks to China pumping billions into construction to try and keep millions of labourers working. China needs to keep that growth ticking along at around 7% or more just to handle the workers heading into the cities looking for a better life.

    But we know that Chinese economy is slowing now, but it ain’t easy getting reliable numbers from a centrally controlled communist run economy. What we do know is that a range of western companies are seeing the slowdown and the fact the Chinese authorities are taking stimulus measures means they are worried about the slowdown also.

    Commodities prices have already fallen, the miners are warning of mine closures and projects being put on ice – yet we still have the government talking about a boom. Worst of all they still seem to believe it will never stop.

    At least the RBA is awake now. Another rate cut is almost a certainty and more could be on the way.

    The Australian economy might be lucky again, but relying on China to support the economy is a big mistake in my opinion and one which I fear will have severe consequences at some point.

  • 27 BP // May 23, 2012 at 6:49 pm

    Greg: “At least the RBA is awake now. Another rate cut is almost a certainty and more could be on the way.”

    Thank heavens for Keynesian economics!
    Stimulate us, RBA!~ 😉

  • 28 Greg Atkinson // Sep 4, 2012 at 2:42 pm

    As I have commented on a few occasions, Wayne Swan’s budgets should be treated as works of fiction. Here is an extract from an article today in The Australian.

    “Australian government spending rose more than 10 per cent in the June quarter to $139.2 billion, exceeding leaving a $4.29 billion net operating deficit during the quarter, according to the latest figures. Tax revenues rose 13.5 per cent in the quarter to $134.9 billion.

    Seasonally-adjusted government spending rose 2.4 per cent in the second quarter from the first to $66.6 billion, the Australian Bureau of Statistics said today.

    Replacing a $44.4 billion budget deficit last financial year with a slender $1.5 billion surplus this financial year is a key pillar of the Gillard government’s strategy to maintain economic credibility ahead of next year’s expected election.”

    Source: Surplus unlikely as abs data shows spending soared in Q2

    Even with budget cuts and sneaky tax grabs Wayne won’t be able to balance the books.

    Even the mainstream media are starting to wake up now.

  • 29 Stillgotshoeson // Sep 4, 2012 at 4:11 pm

    The are looking to remove some of the middle class welfare and wealthy persons handouts/concessions to fund the planned boost to the education system, will be interesting to see what areas are to be targeted.

  • 30 BP // Sep 4, 2012 at 4:37 pm

    Well, our accountant suggested it might well be an end to the dividend imputation system, introduced by the Hawke/Keating Labor government in the mid-80s.

    Don’t get your hopes up that it might mean the cessation of negative gearing. With residential construction already in decline, they’d target all you very wealthy share traders before they glance over at mum’n’dad property investors… . 😉

  • 31 Biker // Jun 28, 2013 at 8:55 pm

    GA: “Julia Gillard will not make it to the end of 2012 as Prime Minister and I suspect she knows it…”

    Preservatives in her hair dye probably kept her in power six months beyond her expiry date!~

    Knitting toy kangaroos for royalty was the last straw for dyed-in-the-wool Labor supporters.
    She was Gonski! 😀

  • 32 Greg Atkinson // Jun 29, 2013 at 8:25 am

    As usual my timing was out but eventually Gillard was shown the door along with Swanny which was an added bonus.

    Now Rudd and his ego are back for a few months then he too will be shown the door once his comeback fails. Bill Shorten has knifed too many people even for a politician so he won’t be the next leader of the ALP so who will be up next I wonder?

  • 33 Biker // Jun 29, 2013 at 11:50 am

    Knifings aren’t new in politics. “Et tu, ya brute…” has been pretty much par for the course, well before Caesar was taken out by the faceless men of Rome. And Abbott took out Turnbull; Gillard took out Rudd, etc, etc.

    Many were adamant that Rudd would never rise again. He’s back. I’ve asserted that Abbott would never be PM. He may yet rise to that office. He certainly has a tougher fight ahead with Rudd back. A loss against Rudd would mean internet inventor Malcolm Turnbull would be embraced not just by Australians, but the world’s grateful websurfers… .

    Meanwhile, over in WA, Colin Barnett must be pondering his political future if Stephen Smith ousts Mark McGowan. I’d expect many more pessimistic assessments of WA’s economy until Smith decides his future.

  • 34 Biker // Jun 29, 2013 at 4:11 pm

    It’s easy to knock King Kev, but the majority of Australians will be relieved to know that he’s taking over right where Jools left off… finishing the kangaroo… .

  • 35 Lachlan // Jun 29, 2013 at 8:56 pm

    I new Kev would be back when I saw him doing a flood rescue of an old bugger in Brisbane on the TV a while back. Five stars for the acting but.
    Sorry for my cynicism BP.

  • 36 Biker // Jun 29, 2013 at 10:48 pm

    That’s OK, Lachlan. We old buggers need rescuing from time-to-time!

    Given the choice of mouth-to-mouth by either Tony in his budgie smugglers, or Kevin in his trackie, I think I’d just quietly exhale, inhale a lungful and go with the flow… !

  • 37 Lachlan // Jun 30, 2013 at 6:46 am

    Yeah, leave me alone to drown….actually BP that was pretty much how the scene was progressing from the last I saw of it

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