Australian Politics Forum - The new normal growth rate means no surplus

Jovial Monk

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The new normal growth rate means no surplus
Nov 18^th, 2015 at 2:15pm

Quote:

The budget will fall short by about $5 billion every year if "new normal" economic growth, at a slower 3 per cent, becomes entrenched, delaying the return to sustained surpluses indefinitely.

According to PwC modelling, the nation will lose $288 billion worth of growth over the next decade, making it harder to pay for promised rises in defence, education, old age and welfare services.

Below-trend domestic growth – in the absence of another once-in-a-generation commodities boom – means the budget will continuously fall short by about $5 billion a year

The figures are based on modelling by PwC for The Australian Financial Review to test what the nation's future looks like if growth cools to 3 per cent instead of the long-assumed "trend" figure of 3.25 per cent.

A lower "potential" growth rate has been flagged as a distinct possibility by Treasury secretary John Fraser and Reserve Bank of Australia governor Glenn Stevens, with both suggesting the weaker outlook underscores the need for Australians to confront tough questions about how community expectations on services can be met.

PwC's modelling shows how even a small decline in the economy's likely growth rate will have major consequences for the federal budget – which has been based on an assumption that the economy will grow 3.5 per cent every year for five years from 2017-18.

Very few leading forecasters believe such a sustained surge in economic growth is realistic, not least because it would be almost unprecedented.

"It's easy to assume you revert to the long-run average, but you have to do things to get back there," said Jeremy Thorpe, a partner in PwC's national economics and policy consulting team.

Read more: http://www.afr.com/news/economy/new-normal-growth-at-3pc-would-blow-5b-hole-in-budget-20151114-gkz8yn#ixzz3roSTuQHW

You have to do things to get there. Yeah!

A real NBN would already be delivering benefits. A real infrastructure program would help. So. . . .no surplus in sight until we get a decent government.

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crocodile

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Re: The new normal growth rate means no surplus
Reply #1 - Nov 18^th, 2015 at 2:20pm

Jovial Monk wrote on Nov 18^th, 2015 at 2:15pm:

Quote:

The budget will fall short by about $5 billion every year if "new normal" economic growth, at a slower 3 per cent, becomes entrenched, delaying the return to sustained surpluses indefinitely.

According to PwC modelling, the nation will lose $288 billion worth of growth over the next decade, making it harder to pay for promised rises in defence, education, old age and welfare services.

Below-trend domestic growth – in the absence of another once-in-a-generation commodities boom – means the budget will continuously fall short by about $5 billion a year

The figures are based on modelling by PwC for The Australian Financial Review to test what the nation's future looks like if growth cools to 3 per cent instead of the long-assumed "trend" figure of 3.25 per cent.

A lower "potential" growth rate has been flagged as a distinct possibility by Treasury secretary John Fraser and Reserve Bank of Australia governor Glenn Stevens, with both suggesting the weaker outlook underscores the need for Australians to confront tough questions about how community expectations on services can be met.

PwC's modelling shows how even a small decline in the economy's likely growth rate will have major consequences for the federal budget – which has been based on an assumption that the economy will grow 3.5 per cent every year for five years from 2017-18.

Very few leading forecasters believe such a sustained surge in economic growth is realistic, not least because it would be almost unprecedented.

"It's easy to assume you revert to the long-run average, but you have to do things to get back there," said Jeremy Thorpe, a partner in PwC's national economics and policy consulting team.

Read more: http://www.afr.com/news/economy/new-normal-growth-at-3pc-would-blow-5b-hole-in-budget-20151114-gkz8yn#ixzz3roSTuQHW

You have to do things to get there. Yeah!

A real NBN would already be delivering benefits. A real infrastructure program would help. So. . . .no surplus in sight until we get a decent government.

Why are "sustained surpluses" such a good thing ?

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Very funny Scotty, now beam down my clothes.

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Its time

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Re: The new normal growth rate means no surplus
Reply #2 - Nov 18^th, 2015 at 2:21pm

Jovial Monk wrote on Nov 18^th, 2015 at 2:15pm:

Quote:

The budget will fall short by about $5 billion every year if "new normal" economic growth, at a slower 3 per cent, becomes entrenched, delaying the return to sustained surpluses indefinitely.

According to PwC modelling, the nation will lose $288 billion worth of growth over the next decade, making it harder to pay for promised rises in defence, education, old age and welfare services.

Below-trend domestic growth – in the absence of another once-in-a-generation commodities boom – means the budget will continuously fall short by about $5 billion a year

The figures are based on modelling by PwC for The Australian Financial Review to test what the nation's future looks like if growth cools to 3 per cent instead of the long-assumed "trend" figure of 3.25 per cent.

A lower "potential" growth rate has been flagged as a distinct possibility by Treasury secretary John Fraser and Reserve Bank of Australia governor Glenn Stevens, with both suggesting the weaker outlook underscores the need for Australians to confront tough questions about how community expectations on services can be met.

PwC's modelling shows how even a small decline in the economy's likely growth rate will have major consequences for the federal budget – which has been based on an assumption that the economy will grow 3.5 per cent every year for five years from 2017-18.

Very few leading forecasters believe such a sustained surge in economic growth is realistic, not least because it would be almost unprecedented.

"It's easy to assume you revert to the long-run average, but you have to do things to get back there," said Jeremy Thorpe, a partner in PwC's national economics and policy consulting team.

Read more: http://www.afr.com/news/economy/new-normal-growth-at-3pc-would-blow-5b-hole-in-budget-20151114-gkz8yn#ixzz3roSTuQHW

You have to do things to get there. Yeah!

A real NBN would already be delivering benefits. A real infrastructure program would help. So. . . .no surplus in sight until we get a decent government.

Rubbish sloppy promised us a surplus in the first year .......and then went and doubled the budget deficit , in 6 months Cheesy

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Jovial Monk

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Re: The new normal growth rate means no surplus
Reply #3 - Nov 18^th, 2015 at 6:26pm

crocodile wrote on Nov 18^th, 2015 at 2:20pm:

Jovial Monk wrote on Nov 18^th, 2015 at 2:15pm:

Quote:

The budget will fall short by about $5 billion every year if "new normal" economic growth, at a slower 3 per cent, becomes entrenched, delaying the return to sustained surpluses indefinitely.

According to PwC modelling, the nation will lose $288 billion worth of growth over the next decade, making it harder to pay for promised rises in defence, education, old age and welfare services.

Below-trend domestic growth – in the absence of another once-in-a-generation commodities boom – means the budget will continuously fall short by about $5 billion a year

The figures are based on modelling by PwC for The Australian Financial Review to test what the nation's future looks like if growth cools to 3 per cent instead of the long-assumed "trend" figure of 3.25 per cent.

A lower "potential" growth rate has been flagged as a distinct possibility by Treasury secretary John Fraser and Reserve Bank of Australia governor Glenn Stevens, with both suggesting the weaker outlook underscores the need for Australians to confront tough questions about how community expectations on services can be met.

PwC's modelling shows how even a small decline in the economy's likely growth rate will have major consequences for the federal budget – which has been based on an assumption that the economy will grow 3.5 per cent every year for five years from 2017-18.

Very few leading forecasters believe such a sustained surge in economic growth is realistic, not least because it would be almost unprecedented.

"It's easy to assume you revert to the long-run average, but you have to do things to get back there," said Jeremy Thorpe, a partner in PwC's national economics and policy consulting team.

Read more: http://www.afr.com/news/economy/new-normal-growth-at-3pc-would-blow-5b-hole-in-budget-20151114-gkz8yn#ixzz3roSTuQHW

You have to do things to get there. Yeah!

A real NBN would already be delivering benefits. A real infrastructure program would help. So. . . .no surplus in sight until we get a decent government.

Why are "sustained surpluses" such a good thing ?

Deficits caused by paying interest overseas is not exactly good. And that is where we are headed.

I have called for deficits to get the economy moving but even tho we are spending more growth is sputtering out. This means we cannot give jobs to all who want one.

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Ex Dame Pansi

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Re: The new normal growth rate means no surplus
Reply #4 - Nov 18^th, 2015 at 7:12pm

We don't really need a surplus but this is shocking........

"Last week the Turnbull Government voted down its own bill to rein in corporate tax dodging.1 Why they did it is gob-smacking.

You see, the Senate added an amendment that would expose the tax dealings of major private companies, including those owned by Gina Rinehart and James Packer. The ATO said 1 in 5 of these companies paid no tax last year, but the Government doesn't want us to know who.2

So in order to protect the tax secrets of some corporate tax dodgers, the Turnbull Government is willing to let all corporate tax dodgers off scot-free."

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crocodile

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Re: The new normal growth rate means no surplus
Reply #5 - Nov 18^th, 2015 at 7:17pm

Jovial Monk wrote on Nov 18^th, 2015 at 6:26pm:

crocodile wrote on Nov 18^th, 2015 at 2:20pm:

Jovial Monk wrote on Nov 18^th, 2015 at 2:15pm:

Quote:

The budget will fall short by about $5 billion every year if "new normal" economic growth, at a slower 3 per cent, becomes entrenched, delaying the return to sustained surpluses indefinitely.

According to PwC modelling, the nation will lose $288 billion worth of growth over the next decade, making it harder to pay for promised rises in defence, education, old age and welfare services.

Below-trend domestic growth – in the absence of another once-in-a-generation commodities boom – means the budget will continuously fall short by about $5 billion a year

The figures are based on modelling by PwC for The Australian Financial Review to test what the nation's future looks like if growth cools to 3 per cent instead of the long-assumed "trend" figure of 3.25 per cent.

A lower "potential" growth rate has been flagged as a distinct possibility by Treasury secretary John Fraser and Reserve Bank of Australia governor Glenn Stevens, with both suggesting the weaker outlook underscores the need for Australians to confront tough questions about how community expectations on services can be met.

PwC's modelling shows how even a small decline in the economy's likely growth rate will have major consequences for the federal budget – which has been based on an assumption that the economy will grow 3.5 per cent every year for five years from 2017-18.

Very few leading forecasters believe such a sustained surge in economic growth is realistic, not least because it would be almost unprecedented.

"It's easy to assume you revert to the long-run average, but you have to do things to get back there," said Jeremy Thorpe, a partner in PwC's national economics and policy consulting team.

Read more: http://www.afr.com/news/economy/new-normal-growth-at-3pc-would-blow-5b-hole-in-budget-20151114-gkz8yn#ixzz3roSTuQHW

You have to do things to get there. Yeah!

A real NBN would already be delivering benefits. A real infrastructure program would help. So. . . .no surplus in sight until we get a decent government.

Why are "sustained surpluses" such a good thing ?

Deficits caused by paying interest overseas is not exactly good. And that is where we are headed.

I have called for deficits to get the economy moving but even tho we are spending more growth is sputtering out. This means we cannot give jobs to all who want one.

We don't borrow overseas. We issue government bonds in our own sovereign currency. The residential status of the eventual bond holder is unimportant as they are redeemable only in AUD.

There is no interest in reality. On average the local economy grows in nominal terms by around 5%. So too must the money supply. The additional currency enters the economy when the bonds are redeemed.

As long as the federal deficit is under the year to growth of the money supply it is never a problem. Continuous surpluses simply create a deficit on a dollar for dollar basis on the private sector account raising private sector debt levels and diminishing savings.

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Very funny Scotty, now beam down my clothes.

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Jovial Monk

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Re: The new normal growth rate means no surplus
Reply #6 - Nov 18^th, 2015 at 7:18pm

Ex Dame Pansi wrote on Nov 18^th, 2015 at 7:12pm:

We don't really need a surplus but this is shocking........

"Last week the Turnbull Government voted down its own bill to rein in corporate tax dodging.1 Why they did it is gob-smacking.

You see, the Senate added an amendment that would expose the tax dealings of major private companies, including those owned by Gina Rinehart and James Packer. The ATO said 1 in 5 of these companies paid no tax last year, but the Government doesn't want us to know who.2

So in order to protect the tax secrets of some corporate tax dodgers, the Turnbull Government is willing to let all corporate tax dodgers off scot-free."

Neoconf*ckery at its finest.

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crocodile

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Re: The new normal growth rate means no surplus
Reply #7 - Nov 18^th, 2015 at 7:21pm

Ex Dame Pansi wrote on Nov 18^th, 2015 at 7:12pm:

We don't really need a surplus but this is shocking........

"Last week the Turnbull Government voted down its own bill to rein in corporate tax dodging.1 Why they did it is gob-smacking.

You see, the Senate added an amendment that would expose the tax dealings of major private companies, including those owned by Gina Rinehart and James Packer. The ATO said 1 in 5 of these companies paid no tax last year, but the Government doesn't want us to know who.2

So in order to protect the tax secrets of some corporate tax dodgers, the Turnbull Government is willing to let all corporate tax dodgers off scot-free."

Without knowing what tax was due it is pointless saying that 1 in 5 paid none. One of the enduring problems we face here is that corporate taxes are way too high. The deadweight losses on corporate tax is very high. These losses are borne more by the workers than the owners of the capital.

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Very funny Scotty, now beam down my clothes.

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Swagman Gold Member Offline Beware of cheap imitations...... Posts: 15095 Illawarra NSW Gender:	Re: The new normal growth rate means no surplus Reply #8 - Nov 18^th, 2015 at 7:32pm Quote: You see, the Senate added an amendment that would expose the tax dealings of major private companies Nope You see......the Senate isn't elected to govern and make laws so the unrepresentative Senate should really just pull its comrade head in and take a long walk off a short pier......
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Maqqa

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14% - that low?!

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Re: The new normal growth rate means no surplus
Reply #9 - Nov 18^th, 2015 at 8:05pm

Jovial Monk wrote on Nov 18^th, 2015 at 2:15pm:

The budget will fall short by about $5 billion every year if "new normal" economic growth, at a slower 3 per cent, becomes entrenched, delaying the return to sustained surpluses indefinitely.

According to PwC modelling, the nation will lose $288 billion worth of growth over the next decade, making it harder to pay for promised rises in defence, education, old age and welfare services.

If we are to fall short $5B per year

Then how did they get $288B over 10 year?

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Its time

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Re: The new normal growth rate means no surplus
Reply #10 - Nov 18^th, 2015 at 8:57pm

Maqqa wrote on Nov 18^th, 2015 at 8:05pm:

Jovial Monk wrote on Nov 18^th, 2015 at 2:15pm:

The budget will fall short by about $5 billion every year if "new normal" economic growth, at a slower 3 per cent, becomes entrenched, delaying the return to sustained surpluses indefinitely.

According to PwC modelling, the nation will lose $288 billion worth of growth over the next decade, making it harder to pay for promised rises in defence, education, old age and welfare services.

If we are to fall short $5B per year

Then how did they get $288B over 10 year?

Infrastructure after 3 terms of neglect.

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Maqqa

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14% - that low?!

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Re: The new normal growth rate means no surplus
Reply #11 - Nov 18^th, 2015 at 9:15pm

Its time wrote on Nov 18^th, 2015 at 8:57pm:

Maqqa wrote on Nov 18^th, 2015 at 8:05pm:

Jovial Monk wrote on Nov 18^th, 2015 at 2:15pm:

The budget will fall short by about $5 billion every year if "new normal" economic growth, at a slower 3 per cent, becomes entrenched, delaying the return to sustained surpluses indefinitely.

According to PwC modelling, the nation will lose $288 billion worth of growth over the next decade, making it harder to pay for promised rises in defence, education, old age and welfare services.

If we are to fall short $5B per year

Then how did they get $288B over 10 year?

Infrastructure after 3 terms of neglect.

Based on your assumption

So we missed out on $5B/year over 10 years which is $50B

To turn this $5B into $288B you need about just over 32% year on year Shocked

This assumes the project is built immediately to compound over the 3 terms

Cheesy

If not the return is 45%

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crocodile

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Re: The new normal growth rate means no surplus
Reply #12 - Nov 18^th, 2015 at 9:24pm

Maqqa wrote on Nov 18^th, 2015 at 9:15pm:

Its time wrote on Nov 18^th, 2015 at 8:57pm:

Maqqa wrote on Nov 18^th, 2015 at 8:05pm:

Jovial Monk wrote on Nov 18^th, 2015 at 2:15pm:

The budget will fall short by about $5 billion every year if "new normal" economic growth, at a slower 3 per cent, becomes entrenched, delaying the return to sustained surpluses indefinitely.

According to PwC modelling, the nation will lose $288 billion worth of growth over the next decade, making it harder to pay for promised rises in defence, education, old age and welfare services.

If we are to fall short $5B per year

Then how did they get $288B over 10 year?

Infrastructure after 3 terms of neglect.

Based on your assumption

So we missed out on $5B/year over 10 years which is $50B

To turn this $5B into $288B you need about just over 32% year on year Shocked

This assumes the project is built immediately to compound over the 3 terms

Cheesy

If not the return is 45%

To lazy to look at the past budget papers but I assume that the last few federal deficits have been higher than $5 billion. By quite a long shot too.

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Very funny Scotty, now beam down my clothes.

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Jovial Monk

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Re: The new normal growth rate means no surplus
Reply #13 - Nov 18^th, 2015 at 9:35pm

Maqqa wrote on Nov 18^th, 2015 at 8:05pm:

Jovial Monk wrote on Nov 18^th, 2015 at 2:15pm:

The budget will fall short by about $5 billion every year if "new normal" economic growth, at a slower 3 per cent, becomes entrenched, delaying the return to sustained surpluses indefinitely.

According to PwC modelling, the nation will lose $288 billion worth of growth over the next decade, making it harder to pay for promised rises in defence, education, old age and welfare services.

If we are to fall short $5B per year

Then how did they get $288B over 10 year?

$288Bn worth of growth, not deficits.

Run out the real NBN, do it NOW, do it FAST!

Invest in physical infrastructure.

Roll out Gonski

etc.

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Kat

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Re: The new normal growth rate means no surplus
Reply #14 - Nov 18^th, 2015 at 10:27pm

Swagman wrote on Nov 18^th, 2015 at 7:32pm:

Quote:

You see, the Senate added an amendment that would expose the tax dealings of major private companies

Nope You see......the Senate isn't elected to govern and make laws so the unrepresentative Senate should really just pull its comrade head in and take a long walk off a short pier...... Grin

No, it's elected to review policy, block BAD policy, and hold poor governments to account.

Which is exactly what it's been doing.

Don't like that?

Too bloody bad.

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