Economy gets big tick (TheAge)

[lamb22]

Just curious, any answers Lambsy?

Willo, you dont seem to accept the fact that revenue was down against the forward estimates by about $150 Billion. I tried to take you through the process step by step but apprently it didn't take.

You are right I did use total revenue figures rather than tax receipts (my error), but the same pattern emerges when you undertake the exercise on table 2.

In relation to greater debt as a percentage of GDP, in 2011/12 net debt was 9.6%.

Howard alone had greater debt to GDP in 1996/7 (17.3%) 1997/8 (14.1%) and 1998/9 (11.6%). There are another 6 years under Hawke/Keating where net debt is also higher than 2011/12.

Of course without actually seeing the figures, I would assume that in wartime (WW2) and post war and post depression Australia would have run greater debt burdens as it would have been sound economic policy as part of nation building.

Please dont come back with arguments about nominal debt numbers as you would only shred your economic credibility further. As an example the whole economy of Australia produced around $40 billion in 1970/1 whereas now GDP is about $1.5 trillion so comparing raw numbers is an exercise in dumbness.

 

[Willo]

Willo, you dont seem to accept the fact that revenue was down against the forward estimates by about $150 Billion. I tried to take you through the process step by step but apprently it didn't take.

You are right I did use total revenue figures rather than tax receipts (my error), but the same pattern emerges when you undertake the exercise on table 2.

In relation to greater debt as a percentage of GDP, in 2011/12 net debt was 9.6%.

Howard alone had greater debt to GDP in 1996/7 (17.3%) 1997/8 (14.1%) and 1998/9 (11.6%). There are another 6 years under Hawke/Keating where net debt is also higher than 2011/12.

Of course without actually seeing the figures, I would assume that in wartime (WW2) and post war and post depression Australia would have run greater debt burdens as it would have been sound economic policy as part of nation building.

Please dont come back with arguments about nominal debt numbers as you would only shred your economic credibility further. As an example the whole economy of Australia produced around $40 billion in 1970/1 whereas now GDP is about $1.5 trillion so comparing raw numbers is an exercise in dumbness.

You're right it didn't take. $150 billion down on forward estimates from when? You seem to be jumping around and it's hard to follow your condescending replies.

"Comparing raw figures is an exercise in dumbness?" Which you've just done for us. Thanks. So is quoting %'s of GDP. By the way we were comparing recent figures, most you yourself supplied. Not from 40 years ago.

So we've agreed that there has been an increase in tax receipts from $261 billion (2009/10) to $343 billion (est 2012/13, 22.1% of GDP) from chart 2 that you supplied. Yes? Or $84 billion in "total receipts" (an increase of 1.5% of GDP from 22.3 to 23.8% of GDP) or from last year ($330billion) to this year ($368.7billion) So an extra (forecast) $38 billion in tax revenue from last year

And seeing we now have a lesser debt % to GDP how do you think NDIS, Gonski Reforms etc will be funded, hopefully from the extra tax revenue? Any thoughts? I wonder whether the funding will be announced before or after next Budget Day

As for shredding my economic credibility, I've never claimed to have any. Unlike some.
But one thing I do know is that claiming such things (for example) that electricity price rises (of up to 16% in NSW) don't have much to do with the cost of living because it's chucked in the household bucket of cpi of 2% or whatever is absolutely laughable. I'm not saying the Feds are wholly to blame for increases, merely that cpi isn't a true reflection of the cost of living. Regardless of the theory behind it, in practice it's far different. Fuel, land rates, water rates, insurance costs, car rego, etc have all gone up more than a couple of cpi % . At least they have out my way.

 

[Giardiasis]

Seems you have swallowed a textbook on neo classical economics and then attached some random word generator.

I prefer 1000 monkeys on a 1000 keyboards though as it is likely to be more coherent.

You seem to be fighting some ideological culture war which of course means you require no link to reality or empirical evidence.

I don't think you understand neoclassical economics if you think what I've said has any relation to it. In any case I am making a theoretical argument sure, but the Austrian school stands up pretty well to empirical evidence. Pretty much the only school of economics that does.

 

[AngryAnt]

I don't think you understand neoclassical economics if you think what I've said has any relation to it. In any case I am making a theoretical argument sure, but the Austrian school stands up pretty well to empirical evidence. Pretty much the only school of economics that does.

LOL

 

[Giardiasis]

The usual response.

 

[tigersnake]

The usual response.

Still going on about this mythical perfect market that exists in a vacuum with no human intervention, but with a bunch of humans trading goods and services. Its truly bizaare.

 

[Giardiasis]

Still going on about this mythical perfect market that exists in a vacuum with no human intervention, but with a bunch of humans trading goods and services. Its truly bizaare.

I'm not suggesting perfect markets exists, I've already mentioned it would still be inefficient. Government intervention by centralised decision makers who think they know how to spend an individual's money better, and do so through physical coercion is truly bizarre. As is the theory that printing paper money = wealth.

 

[evo]

Willo, As a basic economic tenet government deficits add to economic activity and suprluses detract from economic activity. That's why they are necessary in times of downturn and not necessary in times of up turn. It is why labor have undertaken the greatest contraction of government spending since WW2 in this financial year.

Standard competent economic theory and management practised by Gillard and Swan.

Nice laugh. Corn flake Box Economics in action.

 

[lamb22]

But one thing I do know is that claiming such things (for example) that electricity price rises (of up to 16% in NSW) don't have much to do with the cost of living because it's chucked in the household bucket of cpi of 2% or whatever is absolutely laughable.

Sorry Willo, but I cant continue our discussion because you simply dont understand numbers, stats or context.

I have however quoted the above from your post because it exemplifies the difficulties that those who understand numbers have with those that dont. CPI figures are based on average household consumption and are continually modified to reflect actual consumer spending patterns.

I copied some information from the ABS to help you understand how it is calculated. The rise in elctricity is factored into the CPI and in fact the introduction of the carbon price saw a one off jump of about .6% in the September quarter. For all that inflation year to year still sits at around 2% which is a historically low figure.

Electricity counts on average for about 2-3% of a household's expenditure. If the carbon price pushes it up by 10% it means it adds 0.2% to 0.3% to a household budget. Most households get more back in benefit increases or tax cuts. It is a cost of living storm in a tea cup.

Now you either believe the nonsense you are spouting that electricty is not properly covered in CPI statistics or you are deliberately deceiving or trolling. Either way its a waste of my time continuing this discussion because it is one sided and your "confirmation bias" is clouding any chance for a reasonable debate based on reality and not shock jock ideology.

 

[Giardiasis]

For all that inflation year to year still sits at around 2% which is a historically low figure.

http://globaleconomicanalysis.blogspot.com.au/2013/02/is-inflation-legacy-of-federal-reserve.html

 

[KnightersRevenge]

http://globaleconomicanalysis.blogspot.com.au/2013/02/is-inflation-legacy-of-federal-reserve.html

I'm not sure what that was supposed to tell us? What about the U.S. and the Fed are interesting from an Australian perspective?

 

[Giardiasis]

I'm not sure what that was supposed to tell us? What about the U.S. and the Fed are interesting from an Australian perspective?

Substitute Fed for RBA and Bob's your uncle.

 

[Willo]

Sorry Willo, but I cant continue our discussion because you simply dont understand numbers, stats or context.

I have however quoted the above from your post because it exemplifies the difficulties that those who understand numbers have with those that dont. CPI figures are based on average household consumption and are continually modified to reflect actual consumer spending patterns.

I copied some information from the ABS to help you understand how it is calculated. The rise in elctricity is factored into the CPI and in fact the introduction of the carbon price saw a one off jump of about .6% in the September quarter. For all that inflation year to year still sits at around 2% which is a historically low figure.

Electricity counts on average for about 2-3% of a household's expenditure. If the carbon price pushes it up by 10% it means it adds 0.2% to 0.3% to a household budget. Most households get more back in benefit increases or tax cuts. It is a cost of living storm in a tea cup.

Now you either believe the nonsense you are spouting that electricty is not properly covered in CPI statistics or you are deliberately deceiving or trolling. Either way its a waste of my time continuing this discussion because it is one sided and your "confirmation bias" is clouding any chance for a reasonable debate based on reality and not shock jock ideology.

You can please yourself. But you've still avoided answering a couple of questions, again. As I said I'm interested to learn a bit more, I don't understand your comments on "confirmation bias" or shock jock ideology" But that's your perogative.

I may not have your comprehensive knowledge of economics, numbers, stats,etc. But one thing I do have is experience paying out "actual" money. And when comparing insurances, rates, fuel, gas and electricity bills from one quarter to another, my eyes aren't deceiving me that there has been large increases in all of them. More than a couple of % cpi.

So much for you spouting .6% jump due to the carbon tax (which I wasn't blaming by the way) but neglecting to mention the full price increases. Add that to car & house insurances, land & water rates, fuel etc. 2 % cpi doesn't reflect the real cost. How many people would say their costs have gone up 2%?
For example..
Power pain hits NSW with 18pc price increase
Updated Wed Jun 13, 2012 11:59pm AEST


New South Wales electricity prices are set to rise an average of 18.1 per cent from next month, after a final determination by the regulator.

The decision by the Independent Pricing and Regulatory Tribunal (IPART) is two per cent higher than was contained in its draft report.

The regulator says the even bigger increase is partially due to current uncertainly in financial markets.

IPART chairman Peter Boxall says half of the overall increase is because of rising transmission costs for poles and wires, while the other half is due to the introduction of the carbon tax.

"The bottom line is it's necessary to ensure that retailers can cover the increase in costs they're facing and remain financially viable," he said.

Household bills for Energy Australia customer will increase by 20.6 per cent, an average of an extra $364 a year.

Country Energy customers will be slugged on average an extra $427 a year, an increase of 19.7 per cent.

Integral Energy will be hit by the smallest increase of 11.8 per cent, which translates to an extra $208 a year on average.

Gas prices are also set to increase, by between nine and 15 per cent.

Yesterday's state budget included a $75 rebate to help struggling households with power costs.

But Opposition Leader John Robertson says the rebate is not enough to off-set rising costs.

"It's not going to be enough because Barry O'Farrell's selling off our electricity generators. That's going to push power prices even higher," he said.

"He's already increased prices by 18 per cent and if this IPART determination is applied that's another 20 per cent.

"That's 38 per cent in two years and the rebate isn't going to be enough to off-set the increased costs that are going to be felt right across New South Wales."



Once again I'll say I'm not aiming the rise of cost of living directly at the Federal or State government. No bias one way or the other.
Do people actually believe cpi is a true indicator of a "national" cost of living? Do some areas have a higher cost of living than others?

 

[lamb22]

Willo

Most people suffer from the Supermarket broken trolley wheel syndrome. They remember every time they get a dodgy trolley but not so much when they get a good one.

So people remember rises in prices but not falls. In the December quarter prices for vegetables went down 5.7%, audio visual and computers 4.3%, pharmaceauticals 3.5%.

The CPI is not a complete cost of living index but it is a good model. It works out what the average household spends in certain categories and tracks the changes in price of those items and services. Now some households use more electricty, some have smokers, some have larger consumers of alchohol, some eat out more etc etc so circumstances will change for each for each family but it provides the best data we've got to track price increases.

The 2% figure doesn't mean each item goes up 2%, some go up 10% some go down 5%. The CPI is imperfect but it is a good indicator or whether we live in a country with price infaltion issues or not. We clearly live in a LOW price inflation economy - JUST FACT Willo.

Now the CPI excludes some items such as mortgage interest. If you factor that in cost of living pressures have DECREASED even more (about $5-6000 a year for someone with an average mortgage) with interest rates faling form 6.75% under Howard to 3% under Gillard.

CPI also doesn't factor in the tax cuts of about $2000 for anyone in the average wage which again EASES cost of living poressures.

CPI also doesn't factor increase in benefits such as the $4000 increase in the pension since 2009, the school kids bonus ($810 for Secondary school student, $410 for Primary) increase in the child care rebate to 50%, or super changes which mean an extra $500 for people earning $37,000.

CPI also doesn't measure the 20% average increase in wages these last 5 years.

So we have low price inflation and then we have substantive wage increases, tax cuts, interest rate cuts, increased pensions and other benefits.

For the vast majority of Australians the cost if living has clearly dropped.

For those who are unemployed (with Newstart not keeping pace) they'd struggle a bit, but even they might be likely benefit from the tripling of the tax free threshold from $6000 to $18,000.

The evidence is pretty clear.

The fact that people have convinced themselves that there is a cost of living increase is an indictment on them, the media and of course the liberal party

 

[poppa x]

This is from the ABS Web Site:

Q. Why doesn't the CPI reflect the prices I see?

A. The CPI measures the changes in price of a fixed basket of goods and services based on average household expenditure by capital city households across Australia, not of any specific family or individual. For example, it includes both rental and owner–occupier house purchase costs in the basket, which is impossible for a single household. It is unlikely that any individual experience will correspond precisely with either the national index or the indexes for specific capital cities.


IMO the fixed basket of goods and services does not apply to any household in Australia. It's an average or a mean. Which of course no-one is.
Then there's the issue of what's NOT included in the basket - mainly Governement taxes, which can be fiddled by Governments in the same way they fiddle the employment numbers. If you work one hour a week, then statistically you're not unemployed.

Finally, what lamb22 calls the Cost of Living is not the same thing as the CPI.
Different set of numbers and all numbers lie.
Like all politicians.

 

[lamb22]

Willo

Just for some context on Australian household spending patterns, I enclose link below:

https://www.moneysmart.gov.au/managing-my-money/budgeting/spending/australian-spending-habits

 

[lamb22]

This is from the ABS Web Site:

Q. Why doesn't the CPI reflect the prices I see?

A. The CPI measures the changes in price of a fixed basket of goods and services based on average household expenditure by capital city households across Australia, not of any specific family or individual. For example, it includes both rental and owner–occupier house purchase costs in the basket, which is impossible for a single household. It is unlikely that any individual experience will correspond precisely with either the national index or the indexes for specific capital cities.


IMO the fixed basket of goods and services does not apply to any household in Australia. It's an average or a mean. Which of course no-one is.
Then there's the issue of what's NOT included in the basket - mainly Governement taxes, which can be fiddled by Governments in the same way they fiddle the employment numbers. If you work one hour a week, then statistically you're not unemployed.

Finally, what lamb22 calls the Cost of Living is not the same thing as the CPI.
Different set of numbers and all numbers lie.
Like all politicians.

See my post above, Poppa.

 

[Soda]

The evidence is pretty clear.

The fact that people have convinced themselves that there is a cost of living increase is an indictment on them, the media and of course the liberal party

I agree with much of what you say, I think the average joe has much higher expectations of how they should live, compared to even 10 years ago. Being forced to "save" or having to reduce spending is not something they like. People may think it is more expensive to live but maybe not buying that 3rd coffee or Halo 56 would see them much better off.

I do worry however when a party get's it so wrong with its estimates (did they really think there would be a surplus?). When you bang on about a surplus (which in reality is no biggie) and eventually have to come cap in hand and admit you were wrong the people have a right to wonder.

BTW you should be running the PR department for Julia and Wayne - lamb, telling it as it is.

 

[MB78]

I agree with much of what you say, I think the average joe has much higher expectations of how they should live, compared to even 10 years ago. Being forced to "save" or having to reduce spending is not something they like.

I agree with this. In the last 10 years running two decent cars, having pay TV, having the fastest Internet and having a mobile phone top of the range for every member of the household above the age of 10 is the norm.

So what people now consider needs over the last 10 years would put extra strain on the household budget.

 

[Willo]

Willo

Just for some context on Australian household spending patterns, I enclose link below:

https://www.moneysmart.gov.au/managing-my-money/budgeting/spending/australian-spending-habits

Thanks for that. Interesting.