With Wayne Swan, Treasurer of Australia, being man of the moment this week, it’s the perfect time to revisit a comment left by Jaymez where he compares the nation to a household and adds up just how fast the House of Australia went broke. — Jo
Lesson One: Sending the House of Australia Broke (Quick Method).
A comment by Jaymez December 15, 2012 at 5:32 pm
Imagine this. In the 2006/7 financial year you were on a salary of $118,500 pa. Your total living expenses, all payments and taxes, and even allowing for some retirement savings was $109,500, so you had a decent buffer. You also owned every asset you had with no debts and in fact you had cash in the bank of about $15,000.
Now imagine that since then, you had pay increases up to the end of last financial year (30 June 2011) totalling 39.2% so that your current income is a very healthy $165,000 pa.
- Can you imagine that you would allow your expenses to creep up to $185,500 pa, that’s 69.4% more than your 2006/7 expenditure?
- Can you imagine that this higher level of expenditure doesn’t even include putting any money away for your retirement since 2006 so that you are now way behind on funding your retirement?
- Can you imagine that in ADDITION to this higher level of expenditure, you have also gone out and borrowed money so that your net worth is now -$123,600 and you have no apparent means of paying that debt back? This means you are just going to have to borrow even more money!
That would be a totally unbelievable scenario right?
Yet that is the equivalent of what Wayne Swan, our Treasurer has done while managing Australia’s finances. While there has been a healthy increase in income, he and the Labor Party have dramatically increased expenditure, and have also borrowed billions of dollars we have no way of paying off for a very long time and without incurring some significant pain.
And what do we have to show for it? Some new airports and shipping facilities? Some great new highways or railroads? Maybe we have resolved some major social problems such as Indigenous disadvantage, people smugglers and refugees dying or improved the health and education of the nation? No wait – on all of those measures we have actually declined, as we have with labour productivity and industrial disputation! [That's a bit unfair Jaymez: schools which needed gyms have got libraries, most houses with the speed-installed-pinkbatts didn't burn down, and at least 0.01% of the population is now hooked up to fibreoptic to watch their football in 3D. Talk about national benefit. - Jo]
No doubt the huge debt will only be repaid, and savings to meet the unfunded superannuation payments of retired and retiring public servants will only be made, when the Labor party has been thrown out of office and all the pain will be blamed on the heartless Coalition Government.
But Greece and Italy and Spain and Portugal and Ireland are finding out the hard way that you can’t live beyond your means indefinitely. The longer you put off financial responsibility, the harder and harsher it will be to recover.
Official Budget Outcomes
Total Government Receipts $237 Billion
Total Government Expenditure $219 Billion
Australian Government Budget 2006-7
Total Government Receipts $330 Billion 39.2% greater than 2006/7
Total Government Expenditure $371 Billion 69.4% greater than 2006/7
Australian Government Budget 2011-12
Note: To equate budget figures with salary figures I just turned $Billions into hundreds of thousands and halved it. E.G. $237B became 237,000/2 = $118,500.
Post Note: Henry Ergas wrote that Gillard’s fiscal credibility lies in tatters. “… since Labor was elected, per capita government expenditure has increased by 3 per cent a year in real terms, more than double the rate at which it grew under John Howard.”