tag:blogger.com,1999:blog-2831755574880155421.post8523814855744071680..comments2023-05-01T00:33:18.258-07:00Comments on Stephen Koukoulas: Joe Hockey's Gross IncompetenceStephen Koukoulashttp://www.blogger.com/profile/08403788361480841035noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-2831755574880155421.post-80634977116253787252011-12-24T19:54:32.355-08:002011-12-24T19:54:32.355-08:00http://www.aofm.gov.au/content/borrowing/calendar....http://www.aofm.gov.au/content/borrowing/calendar.asp?NavID=30<br /><br />Stephen,<br /><br />The above is the Issuance Programme for:<br /><br />* Treasury Bonds<br />* Treasury Indexed Bonds<br />* Treasury Notes<br />* Aussie Infrastructure Bonds<br /><br />"Treasury Bond issuance in 2011-12 (that is 1 July 2011 to 30 June 2012) is expected to be around $53 billion. After accounting for maturities of $14 billion this represents net issuance of $39 billion."<br /><br />What is the nett issuance to date from 1 July 2011 for Treasury Bonds?<br /><br />What is the nett issuance against the other sectors? What is the nett issuance for these other sectors from 1 July to date?<br /><br />abcAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2831755574880155421.post-1452443732746306842011-12-23T14:27:11.088-08:002011-12-23T14:27:11.088-08:00Stephen you don't fully explain the difference...Stephen you don't fully explain the difference between gross and net debt, and one of the most important points Joe makes is in regards to off-budget spending which you don't mention at all. <br /><br />First of all, gross debt is often used as the best way to compare debt across countries because there are definitional issues about what gets included in the asset side of the net debt figures. For example, the Economist earlier this year published a chart of gross debt and had this to say: <br /><br />"The chart below shows OECD calculations of what it would take governments to reduce gross debt to 60% of GDP by 2026. This is around the level considered healthy and is also the ratio set by the widely ignored Maastricht agreement, which is meant to govern debt in the European Union. It is not pretty."<br /><br />http://www.economist.com/blogs/dailychart/2011/06/government-debt<br /><br />That 60% figure is taken from Ken Rogoff and Carmen Reinhart's seminal work, This time is different. A book which solely relies on gross debt and finds that it has explanatory power. Do you disagree with the Economist and Harvard Univerisity Professor Ken Rogoff? <br /><br />In Australia, there are many issues with the government's net debt calculations. First of all, the figures include the non-equity investments of the Future Fund (around $60 billion) on the asset side but not the unfunded public servants super on the liabilities side. <br /><br />Second, the Commonwealth government often publishes charts comparing net debt across countries. Countries other than Australia have their sub-national debt included while Australia's doesn't. Go to p. 1-52 of the 2009-10 Budget for instance and there is not even a footnote to acknowledge this fact. Grossly misleading.<br /><br />Third, there is off-budget spending. One of the reasons that the gross debt continues to rise, even after surpluses return, is because the government is booking the NBN at cost and most of the Clean Energy Fund at cost. In reality, nobody beleives that either of these investments will be worth their costs. <br /><br />We already know from the McKinsey-KPMG work that the NBN will earn a rate of return below its cost of capital. If the government were a private company then fair value accounting rules mean that it would need to take a writedown on the NBN immediately. But then the government can do its books like Enron with impunity, no thanks to apologists such as yourself. <br /><br />I am not going to argue about Basel except to say it has nothing to do with what Joe wrote. The government's failure to keep below the $250 billion limit comes AFTER the Basel decisions. It is solely because we had a $15 billion blowout in this year's budget and a deteoration over the forward estimates, some of which is because of the carbon tax.drpagehttps://www.blogger.com/profile/08980083422029028352noreply@blogger.comtag:blogger.com,1999:blog-2831755574880155421.post-44871448109601769092011-12-22T20:52:38.395-08:002011-12-22T20:52:38.395-08:00brianoh: What should be the level of government d...brianoh: What should be the level of government debt right now? What should the target for gross debt be for say, 2013? 2015 and 2020? What level for net debt? CheersStephen Koukoulashttps://www.blogger.com/profile/08403788361480841035noreply@blogger.comtag:blogger.com,1999:blog-2831755574880155421.post-71201178450159317112011-12-22T20:06:46.440-08:002011-12-22T20:06:46.440-08:00How can you say gross debt is tiny other than in c...How can you say gross debt is tiny other than in comparison to highly-indebted countries? A resource-rich country such as Australia during a massive resources boom should not have that level of debt. When the resources boom ends, we run the risk of both high government debt and entrenched high-spending.brianohhttps://www.blogger.com/profile/00242655318196262381noreply@blogger.com