1. Australia’s current deficit is expected to be $19.4 billion!
How badly does this compare with other countries?
Deficits in Denmark, France, Israel, and the Netherlands are all above 4 per cent of gross domestic product (GDP). Britain and Ireland have deficits greater than 6 per cent of GDP. The USA, New Zealand and Japan are now well above 8.0 per cent.
Question: Australia’s deficit as a percentage of GDP is now:
(a) between 8 per cent and 10 per cent, about the same as the USA, New Zealand and Japan
(b) higher than 10 per cent, highest among developed countries
(c) between 4 per cent and 8 per cent, about average
(d) 1.3 per cent
2. According to Tony Abbott’s budget reply speech on 16 May, “This government has [made your life harder]with its … skyrocketing debt.”
So, have Australia’s borrowings this year:
(a) skyrocketed over last year from 44.3 per cent to 66.7 per cent of GDP
(b) increased marginally over last year from 44.3 per cent to 46.5 per cent of GDP
(c) stayed the same at 44.3 per cent of GDP
(d) decreased from last year’s 22.9 per cent down to 20.7 per cent of GDP
3. New York-based Moody's international credit rating agency has reassessed Australia’s economy following the May budget.
Which of the following statement has it issued:
(a) Although the budget is now forecast to remain in deficit through the 2014-15 fiscal year, the projected deficits are small as a percentage of GDP.
(b) The size of the deficits is such that the net government debt will peak at 11.4 per cent of GDP, then fall to zero early in the next decade.
(c) The government’s low debt relative to other AAA-rated countries is one factor supporting Australia’s continuing AAA rating.
(d) all of the above
(e) none of the above
4. According to Shadow Treasurer Joe Hockey, “The Government always compares us to other countries like Japan, the USA, the UK and Europe … A more appropriate comparison is one where we are compared with the fastest runners in the field. There are a number of developed, commodity exporting countries with balance sheets in the black such as Chile, Sweden, Finland and Norway.”
This statement is false because:
(a) Sweden and Finland are not in the black. Both are currently in deficit. Finland has been for four years.
(b) Australia is well ahead of all four countries on employment, interest rates, savings, productivity, economic freedom rating, superannuation and the OECD better life index.
(c) only Chile – with income per person a small fraction of Australia’s – has lower debt to GDP than Australia. Australia is way ahead of the other three.
(d) it is from Joe Hockey
(e) all of the above
5. One guide to the strength of a federal budget is the response of the markets.
“Financial markets have a habit of going for the jugular when an economy is on its knees or when fiscal policy is inept, broken or unsustainable.” — Stephen Koukoulas.
The day after the May budget, the ASX200 index on the Australian Stock Exchange:
(a) dropped dramatically by 1.4 per cent to a 10-year low
(b) dropped significantly by 0.4 per cent to a five-year low
(c) rose significantly by 0.4 per cent to a five-year high
(d) stayed the same
6. Tony Abbott’s budget reply speech several times compared the economic record of the current Government with that of the Howard regime.
“Sixteen members of the Coalition shadow cabinet were ministers in the last government that actually delivered surpluses, as opposed to just promising them.”
Question: Which of the following were achieved by the previous Howard government — with Tony Abbott as one of its ministers?
(a) triple A credit ratings with all three international ratings agencies
(b) employment levels better than the OECD average
(c) economic growth above the OECD average
(d) interest rates lower than under the Labor Government which followed
(e) economic freedom higher than the Labor Government which followed
(f) productivity stronger than the Labor Government which followed
(g) taxation rates lower than the Labor Governments before and after
(h) inflation rates lower than the Labor Governments before and after
(i) all of the above
(j) none of the above
7. Large media organisations tend to lean towards supporting the conservative side of politics. But in 2013, one is unashamedly and enthusiastically promoting Tony Abbott.
All these headlines related to his budget reply speech in one media outlet:
“Abbott's budget reply delivers a perfect political score”
“Abbott 'honest, competent' budget reply”
“Abbott's budget reply has the sweet smell of success”
“Abbott vows to tackle 'budget emergency'”
“Abbott: budget all about lost trust”
“Opposition targets Swan over debt and deficit”
(a) Rupert Murdoch’s News Limited
(b) Fairfax, now controlled by Gina Reinhart
(c) The ABC
(d) The Institute of Public Affairs
(e) None of the above. No-one could be that sycophantic.
8. “With a change of government, your weekly and fortnightly budgets will be under less pressure as electricity prices fall and gas prices fall and the carbon tax no longer cascades through our economy.”
That is according to Tony Abbott’s budget reply speech.
Australia’s inflation rate now, according to the Australian Bureau of Statistics, 10 months after the introduction of the carbon tax, is 2.5 per cent.
(a) below the average inflation rate for Rudd/Gillard period before the carbon tax was introduced
(b) below the average inflation rate for the last two years of the Howard government
(c) below the average inflation rate for the entire 11-year Howard government
(d) significant evidence that Abbott is again, wrong
(e) all of the above.
9. The Paris-based Organisation for Economic Cooperation and Development recently issued its 2013 survey for Australia.
Which of the following warnings were offered in the event of a change of government:
(a) if a new global crisis were to break out, the government should intervene promptly with economic stimulus, as it did in 2008-09
(b) tax reforms, including a broad resource rent tax, are essential
(c) the current efficient environmental policy must continue
(d) a carbon price is essential to encourage investment in clean energy technologies, and to ensure competitiveness in a carbon-constrained world
(e) all of the above
10. Shadow Treasurer Joe Hockey was outraged in his post-budget Press Club speech at the number of consecutive deficits piling up.
“That means seven straight budget deficits from Labor. That is the longest period of successive deficits by one government in more than a generation.”
How many consecutive deficits were there during the period before the Hawke government came to office in 1983? (Of which all but three were delivered by Liberal treasurers)
11. The Gillard Government was not the only one to have been surprised this month by advice from treasury officials that forward estimates of revenue must be revised downwards.
Western Australia’s Liberal Government led by Colin Barnett since 2008 (re-elected in March) has just had more than $2 billion slashed from state revenue forecasts since February’s pre-election financial update.
Which of these headlines has appeared in newspapers?
(a) Incompetent Liberal Government admits staggering two billion dollar black hole
(b) Barnett reveals true state of economy two months after stolen election
(c) Abbott demands WA Treasurer sacked in multi-billion dollar fiscal crisis shock
(d) all of the above
(e) none of the above
12. Tony Abbott’s budget reply speech included this:
“That’s how Bob Hawke and John Howard ran their governments but that’s not how government is run now, as the four former ministers now sitting on the backbench have testified.”
This was a barbed reference to the ex-ministers now on Julia Gillard’s backbench following internal party ructions.
When John Howard went to the 2007 election, how many former ministers – most of whom had been sacked for corruption or incompetence – were sitting on his backbench?
(a) only two
(b) four, same as now
Bonus question: How many disgraced former Howard ministers were actually sitting behind Tony Abbott on his backbench when he made that hypocritical remark?
1. (d) 1.3 per cent, the envy of the world.
2. (d) decreased from 22.9 to 20.7 per cent.
3. (d) all of the above.
4. (e) all of the above.
5. (c) rose to a five-year high.
6. (j) none of the above.
7. (c) The ABC. All easily googled.
8. (e) all of the above.
9. (e) all of the above.
10. (d) 32. See chart 2.14 here.
11. (e) none. Actual headlines all imply the WA Premier and Treasurer are firmly in control and the fault lies elsewhere – in stark contrast to the headlines regarding federal revenue forecast revisions.
12. (d) 17. Bonus question: five. Details here.
As usual, disputes are welcome and correspondence will be entered into.
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