Wayne’s ‘Swan Song’ – He’s Obviously Tone Deaf!

Wayne’s ‘Swan Song’ – He’s Obviously Tone Deaf!

I’m not sure which quote will go down as the dumbest in 2011. Our Prime Minister, Julia Gillard, was the orator of the two that I believe win hands down. The first “there will be no carbon tax under the government that I lead” we all know what happened with that. The second is “the Government remains committed to returning the budget to surplus by 2012 – 13.”

The latter quote was succinctly critiqued by Future Fund chairman David Murray who hit out at the Australian government – Murray slams Gillard’s crisis response: report. Mr Murray told The Australian that the Labor government’s “surprise” carbon and mining taxes were putting Australia’s reputation with international investors at risk at a very delicate time, warning that Australia’s 20 years of continuous growth could come to an end. “I would have thought what’s going on with Europe – even what’s happened to the currency in recent times – would tell us that it can end. Yet there’s no entrenched realisation that this is a very risky position that we are in.”

The reason the Government remains committed to returning the budget to surplus by 2012 – 13 is simple. It doesn’t want the Opposition to run advertising campaigns prior to the next election in 2013, saying that the Labor government is incapable of managing our economy.


Budget predictions turned from bad to worse when the ‘World’s Greatest Treasurer’, Wayne Swan, released his Mid Year Economic and Fiscal Outlook (MYEFO) where the forecasts of a $22.600 billion blister predicted in May had blown out to $37.100 billion in November. This prompted an avalanche of attacks (understandably) at the government’s economic credibility. Swan’s pursuit of surplus branded ‘madness’ to put this into perspective after the May budget Alan Kohler wrote on his Business Spectator website BUDGET 2011: On a wing and a prayer. As quick as a flash I eagerly awaited Mr Kohler’s response to the MYEFO: Budget for a fool’s paradise and Wake up for a budget stinker – I loved this observation “Economic growth for 2012 – 13, about which nobody has the faintest clue, has been reduced by 13 per cent to 3.25 per cent. Revenue for that year has been reduced by just 1.7 per cent.”

Over to the ‘World’s Greatest Treasurer’ – Surplus sends message to world: Swan “At a time of heightened global instability, our fiscal discipline here needs to send a message to the world” – the treasurer is now delusional. What is missing is that if the budget is not in surplus by 2012 -13 a resignation will be immediately tendered – no chance of that happening. The graph below identifies Wayne Swan’s bread and surpluses trick I take exception to being treated like a fool.

Stephen Koukoulas wrote on his economics, financial markets and politics blog: Fascinating Fiscal Facts – Who’s addicted to spending and taxing?

  • Total government receipts (tax, dividends, fees and the like) was 21.6 % of GDP in 2010 – 11, the lowest since 1973 – 74 when Frank Crean was Treasurer.
  • The tax to GDP[ ratio fell to 20.0% in 2010 – 11, the lowest since 1978 – 79 and is a whopping 4.2% of GDP below the record tax to GDP ratio raked in by the Howard government in 2004 – 05 and 2005 – 06. That’s a lesser tax take of around that was taken tax payers during the peak period of the Howard government. As mentioned elsewhere, it is easy to register a budget surplus when you tax the living daylights out of the population.
  • Real government payments> (spending) will rise by an average of less than 0.1% per annum in the 3 years to 2012 – 13, the weakest 3 yearly spending growth since the mid to late 1980’s under the Hawke/Keating Government. Never once did the Howard Government deliver a cut in real government spending – in fact real spending grew by a thumping 3.5% per annum for the last five years of the Howard government.
  • Payments ( spending> will be 23.6% of GDP in 2012 – 13 around 1.5% of GDP below the average of the last 30 years. In the 12 Howard Government Budgets, spending to GDP averaged 24.2% of GDP: and only in 3 years out of 12 of the Howard Government was the spending to GDP ratio lower than the Gillard Government is projecting for 2012 – 13.
  • The 4.3% of GDP turnaround in the Budget balance in the 3 years to 2012 – 13 (from a deficit of 4.2% to a surplus of 0.1%) is the most rapid turn in the fiscal position on record.

We keep reading house prices at risk from Europe crisis so no relief for the 8 biggest losses on Mermaid Beach’s Millionaire’s Row show no post – GFC recovery in sight. A home in Hedges Avenue (sold in 2007 for $17.500 million) has resold for $7.700 million, meaning the price dropped by about $50,000 each week over the four year ownership. In Mosman Billionaire Oatley wine family snaps up Kahala for the best of Balmoral’s boating facilities. The owner paid $22.500 million for the home in 2007 and we estimate it would have re – sold for approximately $18.500 million.

In the boom (n) times the top – end properties show the fastest price appreciation where today – It’s an affluent housing correction: Christopher Joye. Mosman is no exception to this rule although we are observing some interesting property market machinations. Another very strong week of sales evidence in Mosman and we can expect this momentum to continue through to Christmas. If we then look at the number of houses in Mosman on the market there is an interesting pattern emerging.

On September 29 2011, there were 106 houses on the market, so watch the weekly pattern since then. 115, 133, 147, 147, 168, 136, 134 and this week 118.

This shows finally, that demand is meeting supply which, in my humble opinion, is a most positive sign. Prices can’t go down if stock levels continue to decline. That can only happen when supply far exceeds demand and we are not seeing that as the numbers indicate.

Source: Domain Property Monitors

    MOSMAN – 2088

    • Number of houses on the market last week – 134
    • Number of houses on the market this week – 118
    • Number of apartments on the market last week – 118
    • Number of apartments on the market this week – 111

    CREMORNE – 2090

    • Number of houses on the market last week – 15
    • Number of houses on the market this week – 14
    • Number of apartments on the market last week – 31
    • Number of apartments on the market this week – 30

    NEUTRAL BAY – 2089

    • Number of houses on the market last week – 15
    • Number of houses on the market this week – 14
    • Number of apartments on the market last week – 100
    • Number of apartments on the market this week – 93

For this week’s sales in Mosman real estate, Beauty Point real estate, Clifton Gardens real estate, Balmoral real estate, Cremorne real estate, Cremorne Point real estate, Neutral Bay real estate, Cammeray real estate – Click Here

For this week’s open for inspections – Click Here

It’s been a brilliant year for our Members of Parliament – massive pay rise for MP’s, but travel perks on way out. Last week the ‘shock market’ identified a losing streak shaves $80b off shares only to see on Thursday Australian stocks soar in global rally.

Somewhat reminiscent of the ‘World’s Greatest Treasurer’s’ – Fudge –it 2011.

Next week –our final edition for 2011.

Cheers ^__^

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