Abbott/Liberal Govt Watch

[Roxy the Rat Girl]

All valid points, but are you factoring in the GFC and the need for stimulus?

[Psyber]

All valid points, but are you factoring in the GFC and the need for stimulus?

I was never convinced the need for so much stimulus was there.

Neither was Paul Keating when there was a similar world economic slowdown in the late 1980s.
Then share prices dropped 40% and property prices dropped off to leaving individuals and organisations with mortgages bigger than their property values.

[Gozu]

The organisation pulling Abbott's strings, the IPA:

There is one group to which Tony Abbott has kept his promises since becoming prime minister: the Institute of Public Affairs.

http://www.thesaturdaypaper.com.au/news ... 50xS42KDIU

[Jimmy_041]

Gee, sorry for selectively using the actual budget which only goes to 2017. Silly me, reading the actual document. Wot wos I thunking?

Jimmy, perhaps you should look at the ACTUAL budget for the Department of Health to get the full figures. You will, of course, observe a fall of $428 million in funding for the 2014/15 year and over an $8 billion cut in funding over the forward estimates. Yes, we will get you educated one of these days *grins*
http://www.health.gov.au/internet/budge ... glance.htm

Before I get into specifics, and just out of interest bp2, do you think a Government should be allowed to legislate a budget beyond their tenure? (ie) the incoming Labor Govt of 2017 must stick with the forward estimates contained in this budget?

[bulldogproud2]

Is it the acknowledgement that gross debt is >1 Bn per month but then the statement about the repayments on the amount of debt that occurred under Labor being less than 1 Bn per month?

Sorry, busy with my calculator at work this month
Yes; the AOFM confirmed that we are paying around $12.2b in interest now (in fact, it is around $12.84b as of today)
There are several misstatements and assumptions which I am surprised were not picked up by his own checkers Dr Chris Caton and Chris Richardson.
Here's one to start off with:

When Labor's Kevin Rudd took over as prime minister in 2007, there was $59 billion in Commonwealth securities on issue. Under Mr Rudd, the ratio to GDP continued to fall for another three years, hitting the lowest point of the past 30 years.

Commonwealth securities as a proportion of GDP under Labor governments, 2006 to 2013
Date $ billion % of GDP
Jun-06 59.1 5.4
Jun-07 58.2 4.9
Jun-08 60.4 4.7
Jun-09 101.1 8.1
Jun-10 147.1 11.4
Jun-11 191.3 13.7
Jun-12 234 15.9
Jun-13 257.4 17.0
Source: Australian Office of Financial Management

http://aofm.gov.au/files/2013/07/Table_H12.pdf

Labor was elected in November 2007 and didn't bring down their first budget until June 2008 so the figures as at 6/08 have to be attributed to the previous govt as it was their budget. So the starting point for Labor is $60.4b. BUT, look at the ratio to GDP which he states as falling for the next 3 years. It doesn't: it actually goes up each year. Even using his incorrect figure of $59b, the ratio only fell for the 6 months to 06/08 and then rose sharply from there on. His statement is totally incorrect either way. Actual figures are attached

Simile, he is assuming that the debt attributable to Labor stops at the election time which it does not. Govts do not, and cannot, change the current budget until the next budget date. They may bring down a mini budget, but it still needs to be passed. Simile, the Labor profited from the surpluses of the previous Govt - something they couldn't have avoided until the passing of a budget.
What he has done, is make the figures suit his argument by picking the election date when in 2007 we were in surplus but in deficit in 2013. (ie) debt falling in 2007 and rising 2013 and giving Labor the benefit of both situations, whereas the opposite is the case.

It is possible for an incoming government to increase spending prior to their handing down of their first budget. This has indeed happened under the current Abbott government. For instance, the $8 billion which they handed (unnecessarily) to the Reserve Bank is already included in government expenditure, increasing the current deficit.
Additionally you need to factor in aspects such as looking at the world economic climate. As Roxy stated above, one aspect was the need for stimulus spending during the global financial crisis.
If you look internationally, you will find that Australia has the third lowest Government Debt/GDP ratio of all OECD nations:

http://www.oecd-ilibrary.org/economics/ ... t-table-en

Also, debt is not in itself a bad thing. If the borrowed money produces a greater return than the cost of borrowing, then it is indeed a good thing. With current interest rates so low globally it is, and has been for a few years, a great time to borrow. If the Australian government had not borrowed to finance expenditure in Australia, the country would be far worse off. We would have struggled through the GFC and would quite likely have had double-digit unemployment. Thus, the borrowings have actually been a net saving for the country - a key reason we have one of the top economies in the world at present.
I would hate to be in a business that decided it was better not to borrow at 2% if they were guaranteed a return of upwards of 10%.
Cheers

[bulldogproud2]

Gee, sorry for selectively using the actual budget which only goes to 2017. Silly me, reading the actual document. Wot wos I thunking?

Jimmy, perhaps you should look at the ACTUAL budget for the Department of Health to get the full figures. You will, of course, observe a fall of $428 million in funding for the 2014/15 year and over an $8 billion cut in funding over the forward estimates. Yes, we will get you educated one of these days *grins*
http://www.health.gov.au/internet/budge ... glance.htm

Before I get into specifics, and just out of interest bp2, do you think a Government should be allowed to legislate a budget beyond their tenure? (ie) the incoming Labor Govt of 2017 must stick with the forward estimates contained in this budget?

I am a bit iffy on that one. I do not believe that a government should be able to announce totally new legislation that would not be enacted until after their term. However, it certainly can introduce legislation that is long-term, with funding being announced for their current term and later. There are a number of projects that would take more than three years to implement and fund. These should certainly be able to be announced (including spending allocations beyond their term). Otherwise no long-term projects would be able to be announced and this is a large criticism of governments, that they are only concerned about the next three years. However, it is the prerogative of a future government to change these programmes if they so wish. However, they need to be open to being judged as to whether this is in the interests of the public or whether they should have kept the announced policies intact.
Cheers

[Jimmy_041]

I agree with items like infrastructure where the get started and may go into the next period (eg) Southern Expressway or Adelaide Oval. A change of Govt and all work stops wouldn't be good. Defence procurement is probably another one where forward contracts are signed.

But what happens if, in 2016, the current Coalition Govt locks in their current funding for health and schools up to the end of the 2020. Should the new Labor Govt have to just suck it up or have they earned the right to make their own budget from 2017 - 2018 budget? If they had to suck it up, an outgoing Govt would be budgeting for the first 3.5 years of the incoming Govt's first 4 year term.

[Jimmy_041]

Is it the acknowledgement that gross debt is >1 Bn per month but then the statement about the repayments on the amount of debt that occurred under Labor being less than 1 Bn per month?

Sorry, busy with my calculator at work this month
Yes; the AOFM confirmed that we are paying around $12.2b in interest now (in fact, it is around $12.84b as of today)
There are several misstatements and assumptions which I am surprised were not picked up by his own checkers Dr Chris Caton and Chris Richardson.
Here's one to start off with:

When Labor's Kevin Rudd took over as prime minister in 2007, there was $59 billion in Commonwealth securities on issue. Under Mr Rudd, the ratio to GDP continued to fall for another three years, hitting the lowest point of the past 30 years.

Commonwealth securities as a proportion of GDP under Labor governments, 2006 to 2013
Date $ billion % of GDP
Jun-06 59.1 5.4
Jun-07 58.2 4.9
Jun-08 60.4 4.7
Jun-09 101.1 8.1
Jun-10 147.1 11.4
Jun-11 191.3 13.7
Jun-12 234 15.9
Jun-13 257.4 17.0
Source: Australian Office of Financial Management

http://aofm.gov.au/files/2013/07/Table_H12.pdf

Labor was elected in November 2007 and didn't bring down their first budget until June 2008 so the figures as at 6/08 have to be attributed to the previous govt as it was their budget. So the starting point for Labor is $60.4b. BUT, look at the ratio to GDP which he states as falling for the next 3 years. It doesn't: it actually goes up each year. Even using his incorrect figure of $59b, the ratio only fell for the 6 months to 06/08 and then rose sharply from there on. His statement is totally incorrect either way. Actual figures are attached

Simile, he is assuming that the debt attributable to Labor stops at the election time which it does not. Govts do not, and cannot, change the current budget until the next budget date. They may bring down a mini budget, but it still needs to be passed. Simile, the Labor profited from the surpluses of the previous Govt - something they couldn't have avoided until the passing of a budget.
What he has done, is make the figures suit his argument by picking the election date when in 2007 we were in surplus but in deficit in 2013. (ie) debt falling in 2007 and rising 2013 and giving Labor the benefit of both situations, whereas the opposite is the case.

It is possible for an incoming government to increase spending prior to their handing down of their first budget. This has indeed happened under the current Abbott government. For instance, the $8 billion which they handed (unnecessarily) to the Reserve Bank is already included in government expenditure, increasing the current deficit. They still require Parliamentary appropriation. I just lumped appropriations into the "mini budget" bag. It is still required to be passed by Parliament so must be passed by both Houses which is the point. They cant just scrap a standing budget. http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r5165
Additionally you need to factor in aspects such as looking at the world economic climate. As Roxy stated above, one aspect was the need for stimulus spending during the global financial crisis. The "why" is not the basis of my post. My post is about the flawed argument that is not supported by either the data provided (the AOFM Chart which clearly shows % of GDP never went down under Rudd or Gillard) and the basis of calculation which any mathematician will tell you is flawed because it is not consistent (ie) the surplus/debt movement was moving in opposite ways)
If you look internationally, you will find that Australia has the third lowest Government Debt/GDP ratio of all OECD nations:

http://www.oecd-ilibrary.org/economics/ ... t-table-en

Also, debt is not in itself a bad thing. If the borrowed money produces a greater return than the cost of borrowing, then it is indeed a good thing. With current interest rates so low globally it is, and has been for a few years, a great time to borrow. If the Australian government had not borrowed to finance expenditure in Australia, the country would be far worse off. We would have struggled through the GFC and would quite likely have had double-digit unemployment. (debatable) Thus, the borrowings have actually been a net saving for the country - a key reason we have one of the top economies in the world at present.
I would hate to be in a business that decided it was better not to borrow at 2% if they were guaranteed a return of upwards of 10%. (guaranteed? Totally agree, but where's the guarantee?)
Cheers

I don't have a problem with debt as long as 1. it is being used properly (ie) capital investment, and (2) one day someone decides to bite the bullet and stop borrowing and start paying it back. If we do have one of the best economies in the World, then why is it not the time right now? To say let's just borrow more because interest rates are low, is exactly what happened in the mid 2000's and caused so much pain. If anything, a low interest regime is a good time for paying debt back. I can personally vouch for that as I have made huge inroads into mine. Or should I be buying up investment properties and taking margin loans because my debt (actual and repayments as a % of my income) is relatively low in comparison to my neighbours?

[bulldogproud2]

Agreed that the money must be appropriated. However, it was a bill introduced by the Abbott Government that saw spending of $8 billion. Agreed that it had to be passed by both houses, however under a Labor government it would not have been introduced. Thus, as I stated it is very possible for an incoming government to increase expenditure prior to their first budget, through an Appropriation Bill like this one. As such, unfortunately the logic used to state that the ABC Fact Check was incorrect was actually incorrect itself. Thus, it is entirely possible that their fact checking was, indeed, correct. Agreed? *grins* I can't comment on the 2007 scenario as, unfortunately, I don't have the data for that. Thus, I can't dispute your point on that one and am happy to accept it.
The main reason why the budget deficit has blown out though since last year was the fact that the Abbott Government lowered GDP expectations. As stated in Crikey:


'A comparison of the forecasts and estimates from August’s Pre-Election Economic and Fiscal Outlook, prepared independently during the caretaker period by Treasury and Finance, reveals the extent to which Hockey has presided over a dramatic writedown both of revenue and expected economic performance in 2013-14 and 2014-15:
•Real GDP: PEFO 2.5% and 3% MYEFO 2.5% and 2.5%
•Nominal GDP: PEFO 3.75% and 4.5% MYEFO 3.5% and 3.5%
•Unemployment: PEFO 6.25% and 6.25% MYEFO 6% and 6.25%
•Revenue: PEFO $379.9 billion (24.2% of GDP) and $397.7 billion (24.3%) MYEFO $373.9 billion (23.7%) and $387.9 billion (23.8%)
•Spending: PEFO $401.5 billion (25.6% of GDP) and $416 billion (25.4%) MYEFO $412.1 billion (26.1%) and $417.8 billion (25.6%)
•Deficit: PEFO $30.1 billion and $24 billion MYEFO $47 billion and $33.9 billion

The key reason why Treasurer Joe Hockey has presided over a massive blowout in expected deficits over the next four years has nothing to do with Labor, and very little to do with his own spending — which admittedly has gone up nearly $11 billion this year in just 100 days.

No, the key reason is that forecasts for nominal GDP growth have been revised down, and revised down a lot.

In the Pre-Election Economic and Fiscal Outlook released by Treasury and Finance in August, untouched by political hands, budget deficits were expected to total about $55 billion over the next four years, with a small, almost notional, surplus in 2016-17. That’s now turned into $123 billion worth of deficits under Hockey. And nominal GDP growth forecasts have also changed dramatically. In PEFO, they were 3.75%, 4.5%, 5.25% and 5.25% for this year through to 2016-17. Now nominal GDP is forecast to be 3.5%, 3.5% 4.75% and 4.75% for the same years. They are the lowest nominal GDP forecasts since the global financial crisis.

This has a massive impact on revenues, which are very sensitive to changes in nominal GDP growth. Revenue will be $6 billion lower this year, $10 billion next year, $16 billion in 2015-16 and $19 billion in 2016-17.

In comparison, even including this year’s nearly $11 billion blowout, spending is only forecast to rise $20 billion in total beyond PEFO estimates. The deficit blowout is mostly driven by the government’s own decisions this year, but by downward revenue revisions in later years.'

http://www.crikey.com.au/2013/12/17/mye ... blows-out/

By the way, the idea of a 10% return was just an example to show that debt is not a bad thing in itself.

As for paying back debt during a period of low interest rates, it largely depends on whether you are borrowing at a fixed or variable rate. If borrowing at a variable rate, then yes, if your future return from the investment is less than what the rates are likely to increase to, it is a sensible idea to pay the debt back. However, even under variable rates, if the investment is likely to produce a higher rate of return than the cost of borrowing in each year, then the sensible thing is to continue borrowing. With the current global climate, this is likely to be the case for some years yet.

If the borrowing can be done at fixed interest rates, then it makes much more sense to keep on borrowing whilst rates are low.

If there is a high probability of the return being greater than the cost of borrowing, you win by borrowing. It is all logic.

Cheers

[bulldogproud2]

I agree with items like infrastructure where the get started and may go into the next period (eg) Southern Expressway or Adelaide Oval. A change of Govt and all work stops wouldn't be good. Defence procurement is probably another one where forward contracts are signed.

But what happens if, in 2016, the current Coalition Govt locks in their current funding for health and schools up to the end of the 2020. Should the new Labor Govt have to just suck it up or have they earned the right to make their own budget from 2017 - 2018 budget? If they had to suck it up, an outgoing Govt would be budgeting for the first 3.5 years of the incoming Govt's first 4 year term.

The incoming government has every right to change the planned spending. However, they really should be honest about it and disclose this prior to the election. They then become answerable for this decision at the polling booth.
Cheers

[Jimmy_041]

I agree with items like infrastructure where the get started and may go into the next period (eg) Southern Expressway or Adelaide Oval. A change of Govt and all work stops wouldn't be good. Defence procurement is probably another one where forward contracts are signed.

But what happens if, in 2016, the current Coalition Govt locks in their current funding for health and schools up to the end of the 2020. Should the new Labor Govt have to just suck it up or have they earned the right to make their own budget from 2017 - 2018 budget? If they had to suck it up, an outgoing Govt would be budgeting for the first 3.5 years of the incoming Govt's first 4 year term.

The incoming government has every right to change the planned spending. However, they really should be honest about it and disclose this prior to the election. They then become answerable for this decision at the polling booth.
Cheers

As dishonest as an outgoing Govt using forward estimates to entrap the new Govt? How about we agree that both are dishonest because they are?

[Jimmy_041]

Agreed that the money must be appropriated. However, it was a bill introduced by the Abbott Government that saw spending of $8 billion. Agreed that it had to be passed by both houses, however under a Labor government it would not have been introduced. Thus, as I stated it is very possible for an incoming government to increase expenditure prior to their first budget, through an Appropriation Bill like this one. As such, unfortunately the logic used to state that the ABC Fact Check was incorrect was actually incorrect itself. Thus, it is entirely possible that their fact checking was, indeed, correct. Agreed? *grins* I can't comment on the 2007 scenario as, unfortunately, I don't have the data for that. Thus, I can't dispute your point on that one and am happy to accept it.
The main reason why the budget deficit has blown out though since last year was the fact that the Abbott Government lowered GDP expectations. As stated in Crikey:


'A comparison of the forecasts and estimates from August’s Pre-Election Economic and Fiscal Outlook, prepared independently during the caretaker period by Treasury and Finance, reveals the extent to which Hockey has presided over a dramatic writedown both of revenue and expected economic performance in 2013-14 and 2014-15:
•Real GDP: PEFO 2.5% and 3% MYEFO 2.5% and 2.5%
•Nominal GDP: PEFO 3.75% and 4.5% MYEFO 3.5% and 3.5%
•Unemployment: PEFO 6.25% and 6.25% MYEFO 6% and 6.25%
•Revenue: PEFO $379.9 billion (24.2% of GDP) and $397.7 billion (24.3%) MYEFO $373.9 billion (23.7%) and $387.9 billion (23.8%)
•Spending: PEFO $401.5 billion (25.6% of GDP) and $416 billion (25.4%) MYEFO $412.1 billion (26.1%) and $417.8 billion (25.6%)
•Deficit: PEFO $30.1 billion and $24 billion MYEFO $47 billion and $33.9 billion

The key reason why Treasurer Joe Hockey has presided over a massive blowout in expected deficits over the next four years has nothing to do with Labor, and very little to do with his own spending — which admittedly has gone up nearly $11 billion this year in just 100 days.

No, the key reason is that forecasts for nominal GDP growth have been revised down, and revised down a lot.

In the Pre-Election Economic and Fiscal Outlook released by Treasury and Finance in August, untouched by political hands, budget deficits were expected to total about $55 billion over the next four years, with a small, almost notional, surplus in 2016-17. That’s now turned into $123 billion worth of deficits under Hockey. And nominal GDP growth forecasts have also changed dramatically. In PEFO, they were 3.75%, 4.5%, 5.25% and 5.25% for this year through to 2016-17. Now nominal GDP is forecast to be 3.5%, 3.5% 4.75% and 4.75% for the same years. They are the lowest nominal GDP forecasts since the global financial crisis.

This has a massive impact on revenues, which are very sensitive to changes in nominal GDP growth. Revenue will be $6 billion lower this year, $10 billion next year, $16 billion in 2015-16 and $19 billion in 2016-17.

In comparison, even including this year’s nearly $11 billion blowout, spending is only forecast to rise $20 billion in total beyond PEFO estimates. The deficit blowout is mostly driven by the government’s own decisions this year, but by downward revenue revisions in later years.'

http://www.crikey.com.au/2013/12/17/mye ... blows-out/

By the way, the idea of a 10% return was just an example to show that debt is not a bad thing in itself.

As for paying back debt during a period of low interest rates, it largely depends on whether you are borrowing at a fixed or variable rate. If borrowing at a variable rate, then yes, if your future return from the investment is less than what the rates are likely to increase to, it is a sensible idea to pay the debt back. However, even under variable rates, if the investment is likely to produce a higher rate of return than the cost of borrowing in each year, then the sensible thing is to continue borrowing. With the current global climate, this is likely to be the case for some years yet.

If the borrowing can be done at fixed interest rates, then it makes much more sense to keep on borrowing whilst rates are low.

If there is a high probability of the return being greater than the cost of borrowing, you win by borrowing. It is all logic.

Cheers

Leave the Crikey one with me. They are always pretty balanced..... Plus, my head is still reeling from the State of Origin and the need to get some sleep before Aust v Cheeseheads. But, no doubt, shoeboy has got his head around all this and will provide his usual insightful commentary

But, as for the ideology of continuing to borrow because of low interest rates, just because they are low; sorry but I dont agree. Everyone thought interest rates were low in the late 2000's to their ultimate detriment. And did the Govt borrow to invest in assets that would provide a positive rate of return, or just buy votes by throwing money at the masses? And, I'm not really sure Govts look at future return on borrowings. Plus, do not bond rates have set rate of interest? The open markets buy and sell the bonds according to risk and return?

Good discussion though (other than the usual gratuitous *grins* that amuses the likes of shoeboy but no-one else)

[Roxy the Rat Girl]

I agree with items like infrastructure where the get started and may go into the next period (eg) Southern Expressway or Adelaide Oval. A change of Govt and all work stops wouldn't be good. Defence procurement is probably another one where forward contracts are signed.

But what happens if, in 2016, the current Coalition Govt locks in their current funding for health and schools up to the end of the 2020. Should the new Labor Govt have to just suck it up or have they earned the right to make their own budget from 2017 - 2018 budget? If they had to suck it up, an outgoing Govt would be budgeting for the first 3.5 years of the incoming Govt's first 4 year term.

A bit more bipartisanship would be good to address the issues of forward investment into critical services such as health and education. The practice of recent governments to dramatically alter or repeal repeal the legislation passed or agreements entered into by their predecessors provides no stability or security within the given sector. This inevitably costs more and delivers diminished outcomes over the medium and long term.

[Jimmy_041]

I agree with items like infrastructure where the get started and may go into the next period (eg) Southern Expressway or Adelaide Oval. A change of Govt and all work stops wouldn't be good. Defence procurement is probably another one where forward contracts are signed.

But what happens if, in 2016, the current Coalition Govt locks in their current funding for health and schools up to the end of the 2020. Should the new Labor Govt have to just suck it up or have they earned the right to make their own budget from 2017 - 2018 budget? If they had to suck it up, an outgoing Govt would be budgeting for the first 3.5 years of the incoming Govt's first 4 year term.

A bit more bipartisanship would be good to address the issues of forward investment into critical services such as health and education. The practice of recent governments to dramatically alter or repeal repeal the legislation passed or agreements entered into by their predecessors provides no stability or security within the given sector. This inevitably costs more and delivers diminished outcomes over the medium and long term.

Herein lies the problem and the current "argument".
The current Govt have every right to have their own budget and completely disregard the forward estimates of the previous Govt (hence the basis of their argument that the Coalition are not cutting funding [as promised] but are actually increasing it)

In fact, the current Coalition Govt ARE increasing funding to the States as per Table 4.2 http://budget.gov.au/2014-15/content/bp3/html/bp3_03_part_2b.htm

What this table shows is the reduction in last year's forward estimates (ie) the wish list of the previous government: http://www.health.gov.au/internet/budget/publishing.nsf/Content/budget2014-glance.htm

So, one side is arguing that funding is going up (Table 2.4), and the other side is saying they have slashed funding whereas that funding had never been more than an estimate. Some say a re-elected Labor Govt would never have given the money over either, but that it was always a time bomb inserted by them with the future strategy in mind.

I haven't looked at the Education budget yet - maybe that's the same scenario

[bulldogproud2]

Hi Jimmy,
Whilst the funding of the National Partnerships may be increasing, this is just a small component of the Health Budget. You will find that the Abbott Government is actually slashing $8 billion of expenditure from the Department of Health's budget over the next four years. This has NOTHING TO DO WITH THE LABOR PARTY'S FORWARD ESTIMATES but is based on the real spending of the 2013/14 year:

http://www.health.gov.au/internet/budge ... glance.htm

This is money which the States need to find in order to enable these services to continue to operate.
Cheers

[Jimmy_041]

Jimmy, just answer me one thing please. Has it been announced by the Liberal Party that there will be a decrease in funding in the health portfolio of $50 billion over an eight year period commending in 2017 or not?
Just a yes or no answer will do.
Also, has the Federal Government not also immediately axed the National Preventive Health Agreement with the States, meaning the States have to come up with an extra $1 billion of funds themselves.

Cheers

As you are well aware, it is not a simple Yes or No answer
No. There was no funding for 8 years from 2017 so how can there be a decrease? How can any Govt promise funding when they have no idea whether they will be in power or not. It is pie in the sky. They have merely said that they will not honour an election "promise" from Labor (and we all know what promises are worth). Were those "promises" legislated and therefore made L.A.W. ? No.

Did the Coalition say they are not going to honour a distant election "promise" made by another party? Yes

With respect to the National Preventative Health Agreement; more gobbledegook from the States. $446m is being redirected to the Medical Research Future Fund and they have funded some new initiatives (eg) boosting research into Dementia ($200m over 5 years) and National Bowel Cancer Screening Programme ($96m over 4 years). It is not as simple as "axed the National Preventive Health Agreement with the States, meaning the States have to come up with an extra $1 billion of funds themselves." No doubt they have made some major changes but the "major cuts" everyone is talking about is just smoke and mirrors. Much of the money has just been re-directed to other programmes.

This is an interesting one:
Cuts for concession card holders
Axing the National Partnership Agreement on certain concessions for pensioners concession card and seniors card holders will affect discounts on rates, water, sewerage and power bills, car rego and public transport discounts. Saves $1.3 billion over four years from July 1 2014

So the Feds were paying for concession cards relating to State taxes!!!!! No wonder the States didn't want this to go. The Feds are subsiding the State Treasuries whilst they happily jack the taxes up. Maybe they need to look after their own pensioners. I'm still waiting for our State taxes to be abolished from the introduction of the GST. Seems to have slipped everyone's mind

[Jimmy_041]

Hi Jimmy,
Whilst the funding of the National Partnerships may be increasing, this is just a small component of the Health Budget. You will find that the Abbott Government is actually slashing $8 billion of expenditure from the Department of Health's budget over the next four years. This has NOTHING TO DO WITH THE LABOR PARTY'S FORWARD ESTIMATES but is based on the real spending of the 2013/14 year:

http://www.health.gov.au/internet/budge ... glance.htm

This is money which the States need to find in order to enable these services to continue to operate.
Cheers

It has everything to do with forward estimates. You are correct that it is the DOH's budget but that is based upon forward estimates as provided by the previous Govt. Proves my point that a Govt in their last year cannot budget four years ahead and hold the next Govt to it (or themselves for that matter).

I am not sure what you are trying to say by "is based on the real spending of the 2013/14 year" Forward estimates are not based upon actual spending. The only thing based upon real spending is the actual spending for that year although the budget does show where there have been +/- in the budget.

[bulldogproud2]

Hi Jimmy,
Whilst the funding of the National Partnerships may be increasing, this is just a small component of the Health Budget. You will find that the Abbott Government is actually slashing $8 billion of expenditure from the Department of Health's budget over the next four years. This has NOTHING TO DO WITH THE LABOR PARTY'S FORWARD ESTIMATES but is based on the real spending of the 2013/14 year:

http://www.health.gov.au/internet/budge ... glance.htm

This is money which the States need to find in order to enable these services to continue to operate.
Cheers

It has everything to do with forward estimates. You are correct that it is the DOH's budget but that is based upon forward estimates as provided by the previous Govt. Proves my point that a Govt in their last year cannot budget four years ahead and hold the next Govt to it (or themselves for that matter).

I am not sure what you are trying to say by "is based on the real spending of the 2013/14 year" Forward estimates are not based upon actual spending. The only thing based upon real spending is the actual spending for that year although the budget does show where there have been +/- in the budget.

Hi Jimmy my friend,
i think you are missing the basics here. This is the budget handed down by the LNP Government for this year. The first column shows the Labor budgeted spending for the 2013/14 year and is the only column that relates to Labor at all. [i]Labor's forward estimates are NOT in these figures at all.[/i] The columns from then on detail the ABBOTT Government's budget. As you will see, they show a decline in spending of over $8 billion being planned over the four years compared to the spending of the Labor government for 2013/14.
Cheers

[bulldogproud2]

Jimmy, just answer me one thing please. Has it been announced by the Liberal Party that there will be a decrease in funding in the health portfolio of $50 billion over an eight year period commending in 2017 or not?
Just a yes or no answer will do.
Also, has the Federal Government not also immediately axed the National Preventive Health Agreement with the States, meaning the States have to come up with an extra $1 billion of funds themselves.

Cheers

As you are well aware, it is not a simple Yes or No answer
No. There was no funding for 8 years from 2017 so how can there be a decrease? How can any Govt promise funding when they have no idea whether they will be in power or not. It is pie in the sky. They have merely said that they will not honour an election "promise" from Labor (and we all know what promises are worth). Were those "promises" legislated and therefore made L.A.W. ? No.

Did the Coalition say they are not going to honour a distant election "promise" made by another party? Yes

With respect to the National Preventative Health Agreement; more gobbledegook from the States. $446m is being redirected to the Medical Research Future Fund and they have funded some new initiatives (eg) boosting research into Dementia ($200m over 5 years) and National Bowel Cancer Screening Programme ($96m over 4 years). It is not as simple as "axed the National Preventive Health Agreement with the States, meaning the States have to come up with an extra $1 billion of funds themselves." No doubt they have made some major changes but the "major cuts" everyone is talking about is just smoke and mirrors. Much of the money has just been re-directed to other programmes.

This is an interesting one:
Cuts for concession card holders
Axing the National Partnership Agreement on certain concessions for pensioners concession card and seniors card holders will affect discounts on rates, water, sewerage and power bills, car rego and public transport discounts. Saves $1.3 billion over four years from July 1 2014

So the Feds were paying for concession cards relating to State taxes!!!!! No wonder the States didn't want this to go. The Feds are subsiding the State Treasuries whilst they happily jack the taxes up. Maybe they need to look after their own pensioners. I'm still waiting for our State taxes to be abolished from the introduction of the GST. Seems to have slipped everyone's mind

Jimmy, the point you are missing re the health cuts is that it has nothing to do with Labor forward estimates. To the best of my knowledge, they have not even issued forward estimates for this period. It is $50 billion that is being cut from CURRENT spending rates. The Abbott Government has stated that they are DECREASING funding of health by $50 billion from 2017 onwards based on the ACTUAL current spending on health. They have stated that public hospitals should be funded by states, not by commonwealth funds, so are WITHDRAWING Commonwealth funds.
Cheers

[Jimmy_041]

They did issue forward estimates - it is always in the budget. It is not $50b being cut from current spending at all. It is a cut to the promises of future spending made by Labor. Federal health grants have actually increased since 2013 - 2014 - that is in Table 4.2 http://budget.gov.au/2014-15/content/bp3/html/bp3_03_part_2b.htm. You can see what was spent in 2013 - 2014 ($15,854.6m) and what will be given in 2014-2015 ($16,419.7m), 2015-2016 ($17,500.4m) and so on up to 2017-2017 ($19,532.0m).

Another example; if there was an election this year, Labor wins, and reinstates their original funding promises, you would see a very different Table 4.2, and the chart in http://www.health.gov.au/internet/budget/publishing.nsf/Content/budget2014-glance.htm would have some massive +'s in the "forward estimates". Have a look at the chart - it actually says "Forward Estimates" for 2015-2016 to 2017-2018. You know why? Because they are merely giving the department a 4 year budget to work on. Next year that will also show a forward estimate for 2018-2019, HOWEVER, there is an election in January 2017, and so is subject to change by either new Govt.

Under Table 4.2 is another table National Health Reform and public hospitals fundingwhich gives the 4 year payments to each State. They increase every year. In 2013-2014, SA received $1,006.4m. In 2017-2018, SA will receive $1,316.0m. Funding is not cut at all.

This is the fundamental argument at the moment. Labor's forward promises for the years after the 2013 election have been slashed, and the amount of cuts is in the "Budget at a Glance" not in Table 4.2. What was cut was the same Table 4.2 created by Labor in their last year which showed an exponential growth rate over the next 4 years and beyond. Can I ask? WTF is a Govt declaring funding for the next 10 years when they have no idea how many of those years they will be in Govt?

Herein lies the time bomb to make the next Govt look bad by cutting back. It is a massive con.