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Australia underestimated growth, unemployment, and debt figures by billions

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Australia will post a budget deficit of $30.1 billion for the fiscal year, a gross miscalculation from its May estimate of $18 billion, but the government promises to stay on track.

Federal Treasurer Chris Bowen, speaking on the newly-released economic report, said Australia is undergoing ‘economic transition’ and ‘not a crisis’. Bowen predicts weaker economic growth, increased unemployment, and more government debt on the horizon.

The forecast 2014-2015 deficit has surged to $24 billion, up from the previously $10.9 billion. The government has vowed to curb the deficit for the 2016-2017 period.

The report shows that Australia’s 2013-2014 deficit will be 1.9 percent of GDP, much lower than the US deficit of 5.4 percent of the economy, Japan’s 7 percent, or the euro zone’s 2.6 percent, according to April IMF data.

Australia isn’t expected to reach a surplus until 2016-2017, when it is projected to be $4 billion, also trimmed from its May figure of $6.6 billion. Many government officials are skeptical the budget will reach a surplus by the 2016-2017 fiscal year.

“It’s blatantly obvious – Labor has lost control of the budget and is losing control of the economy,” Coalition treasury spokesman Joe Hockey said, pointing his finger at the Labor party for derailing the economy. Hockey added the budget is in a ‘free fall’.

The booming mining business has been stunted by low metals prices, and low commodity prices could be a small factor in the budget shortfall. Before the metals pricing slump, minerals and natural resources had propped up the economy amidst surrounding global economic recession.

Prime Minister Kevin Rudd is seeking election on a widening deficit instead of austerity measures, which the Aussies view favorably in opinion polls. He may call for an early election as early as September 7.

Growth has slowed to 2.5 percent, still above the 1.7 percent US economic expansion, but much lower than its Pacific counterparts. The May budget projected a 2.75 percent growth rate.

Unemployment isn’t expected to drop until at least 2015, according to the updated economic outlook. The jobless is expected to rise from 5.5 percent to 5.75 percent, and is slated to expand to 6.25 percent before returning below 5 percent in 2015.

The weakening Aussie dollar is helping boost natural resource exports, especially in competition with New Zealand, as the Australian dollar hit a 4.5 year low against the New Zealand dollar late July.

The Australian government is also exploring the option of levying its banks in order to collect budget revenue. It would be imposed on banks, and not account holders, but banks have warned they may pass on levies to customers.
Debt: More debt, says bank chief

The National Australia Bank chief executive agrees Australia needs to expand its deficit in order to grow.

”Australia has a debt problem: we don’t have enough,” Cameron Clyne said on Thursday.

Clyne believes Australia has a ‘unique window’ as AAA-rated country to issue more government debt in order to fund domestic infrastructure and growth.

At present, Canberra has a $300 billion cap on government and securities borrowing for 2013, but this limit may need to be raised according to Clyne.

”If we continue to have the debate that suggests that all debt is bad, and not a debate on the productive use of debt, we will simply not be able to fund the infrastructure this economy needs to thrive into the future,” said Clyne.


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2 Responses to " Australia underestimated growth, unemployment, and debt figures by billions "

  1. Rick Alexander says:

    There are some things the global community should know about Australia. Yes, it is true we are young as a nation and free – but not for long. We are the only ‘free’ nation in the world that has been ‘disarmed’ following the Port Arthur massacre. No real investigation was done into the facts and the alleged perpetrator (Martin Bryant) was a patsie who under our laws could not legally plead Guilty and the Supreme Court should have ‘legally’ entered a ‘Not Guilty’ plea on his behalf as he was not competent to plead at all. The real shooter has not been bought to account – and whilst you may think it a conspiracy theory – then answer this “Why were Martin Bryants files sealed by the Australian Army for 50 years”? Answer that and you will know the trut. Secondly, we do not have the ‘world’s greatest treasurer’ (Wayne Swan) anymore as both he and the former socialist fabian prime minister Julia Gillard have been thrown out. The replacement, Kevin Rudd will not be around very long so don’t believe anything he promises. Gillard and Rudds socialist agenda has ruined our economy through the introduction of the carbon tax (which is just a socialist tool for re-distribution of wealth). Our reserve bank like the USA Federal Reserve are a bunch of thieves who steal the savings of hard-working Australians by lowering interest rates so that people who have huge loans which they can’t repay – can get mortgage relief – only to go and spend more of it. When interest rates get to zero – and they will get there one day, there will be no more thieving from savings by the government. When that day comes, they will already have in place the high super contributions kitty – which you can’t touch till you are 65, but surprise surprise, the government plays with it all the time – and like Greece, Spain and Cyprus it will all come crashing down. So what has the government planned for Australia (like the other above mentioned countries) ? Bail-in legislation – so that when the crisis comes – and it is coming like a train in a tunnel – they can declare you to be a ‘shareholder’ ie, you made a bad investment, and by the way if you have more than XX$ in the bank you will only get a portion of your ‘investment’ back. Oh, those who only have less than $100K in the bank, your shares are safe – Redistribution of Wealth tactics again. So they take from the rich and give to the poor. Sounds good in principal but one day we will wake yup to realise that in the long run the whole system crashes. Oh, if you are contemplating gold there are a few issues. The 1959 Australia Banking Act give the Governor General power to seize gold – what you didn’t know that?? check it out. The USA had the 1933 Gold Confiscation Act – and they put it into effect when things got tough – so there is nothing new here. Central Banks hate gold because it de-legitimises the value of the worthless paper/plastic money that they print. Remember, it is only worth anything whilst the government stands. if it falls, just remin yourself of the Vymar republic – Germany – during the war, Cyprus, Argentina, Greece – when treasury bond yields go up watch out – they are worthless. SO, have food in stock, get out of debt and make sure you are prepared for the Australian crisis. We got through the 2008/2009 GFC but next time we won’t be so lucky down under.

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  2. GOLD says:

    buy some Gold you idiot!

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