Fuzzball wrote on Mar 28^th, 2017 at 7:43am:


I realised his idiocy long ago. I also noticed you aren't the sharpest tool in the shed either.

Understandably the Lefties don't want to know anything that conflicts with their unsustainable Socialist nonsense.

Now this article MUST be correctly biased as it is from the ABC Socialist Propaganda Station and explains just how govt foreign borrowing works.



Fact check: Is the Government paying $1 billion a month in interest on its debt?
Updated 12 Jun 2014, 9:17am

Joe Hockey's claim on the Government's monthly interest bill and who is responsible is exaggerated.
Photo: Joe Hockey's claim on the Government's monthly interest bill and who is responsible is exaggerated. (AAP: Gary Schafer)

Related Story: Has the Government doubled the budget deficit?


Criticism of spending cuts announced in the budget has triggered a Coalition campaign to persuade the public that the proposed changes are needed. Central to the sales pitch is the argument that Australia needs to reduce its debt.

Treasurer Joe Hockey, one of 33 Coalition members to raise the topic of Australia's interest bill over a single week in May, told Parliament that Labor was to blame. "At the moment we're paying a billion dollars a month – one billion dollars every month in interest, in interest on the debt that Labor has left," he said in Question Time on May 26.

Is the Government really paying $1 billion a month on its debt and is that payment only because of what Labor did during its time in government?

ABC Fact Check finds out.

    The claim: Treasurer Joe Hockey says the Government is paying one billion dollars every month in interest on the debt that Labor left.
    The verdict: Using either gross debt or net debt as a measure, Mr Hockey's claim is exaggerated.

What is government debt?

If a state or federal government needs to raise money either to pay for specific projects or to cover any shortfall between the government's annual revenue and expenditure - known as the deficit - it will issue bonds or notes.

These operate like a loan, where the government agrees to pay the person who buys the bond or note the full purchase price at the time the loan matures, usually two, five, 10 or 15 years from the date of issue. The government pays interest on the loan at fixed intervals, usually twice a year. The initial purchaser of the bond or note can sell it on the open market at the prevailing price, which is based on traders' views of the likely direction of the economy.

According to the 2014-15 budget, Australia's interest-bearing liabilities in the year to June 2014 are expected to reach $358 billion. About 97 per cent of these liabilities are Commonwealth Government Securities (CGS). These are Treasury bonds, Treasury indexed bonds and Treasury notes.

Commonwealth Government Securities

    Treasury bonds, defined in the budget as having a fixed annual rate of interest payable every six months (face value $301 billion)
    Treasury indexed bonds where the capital value is adjusted for movements in the consumer price index, with interest paid quarterly, at a fixed rate, on the adjusted capital value (face value $23 billion)
    Treasury notes which are short‑term securities generally maturing within six months of issuance (face value $4 billion)

Figures as of June 10, 2014

At the moment, there are $329 billion worth of Commonwealth securities on issue.
What is the interest owing on outstanding debt?

The federal budgets include details of how much interest the Commonwealth pays on its debt each year.

The 2014-15 budget shows $13.2 billion will be paid to service CGS liabilities for the year to June 2014, and $13.5 billion next financial year, rising to a projected $16.4 billion by June 2018.

HSBC chief economist Paul Bloxham told Fact Check that a generally accepted way to find a "back of the envelope" calculation of interest payments on government debt is to use the interest rate that the market sets for the 10 year Treasury bond.

Mr Bloxham said the interest rate on securities is determined by the "active, deep and liquid" bond market. Interest rates reflect a range of things, including Australia's AAA sovereign rating, he said. Without this, the interest rate on debt would likely be higher.

In the market, Commonwealth securities are traded by investors including fund managers and foreign reserve managers.

The government always pays fixed interest rates on the notes and bonds it issues, which are set at the issue date. Pricing for new issues is affected by market movements.

The market rate for the 10 year Treasury bond is currently about 3.7 per cent a year. Using Mr Bloxham's back-of-the-envelope method, 3.7 per cent of $329 billion gives an annual interest bill of $12.2 billion, or $1 billion a month.

A spokesman for the Australian Office of Financial Management (AOFM), which manages the government's debt portfolio and is responsible for issuing securities, confirmed that annual interest payments equate to slightly more than $1 billion a month.

He said Mr Bloxham's calculation was a reasonable rule of thumb for calculating interest, mainly because the 10 year bond market rate is fairly similar to the average interest cost which the Commonwealth pays on all its securities currently on issue.

More in the LINK

http://www.abc.net.au/news/2014-06-12/joe-hockey-one-billion-a-month-interest-fa...

Lord Herbert wrote on Mar 28^th, 2017 at 7:25am:


He ex husband wore lots of gold Herb, chains, rings and watches, even had gold capped teeth.

She is looking for that type of guy!

You may be in the money Herb! 

They should never have increased the price of cigarettes -
it means older people will now live longer than ever before.
We will never be able to pay them all the pension.
Maybe they'll die of malnutrition instead?

Jovial Monk wrote on Mar 27^th, 2017 at 8:43pm:

You are very right; but Labour is no better, they are only prepared to govern for the elite 20% of society, as far as income and assets are concerned, because the top Union leaders and all the politicians and ex-politicians are, or will be among them.
The worst part of super, is, that many employers do not pay in the super , and the government does not police the system properly.
Furthermore, even after years of compulsory super, some 80% of the retirees will depend mostly on the age pension for their income, so it is not hard to see, that the Australian super is only set up for the benefit of the rich, the super industry including the Union bosses, who manage super assets, for enormous fees.
Australia is the only country which exempts super incomes of $100,000 plus to be tax exempt; prove me wrong.
Debate: is the new means test for the aged pension fair?

The meanest means-test of the age pension.
The Australian government provides every retired person with the safety net of the age pension, subject to the means test.

According to the means test of income, a single pensioner loses 50 % of the age pension after his/her income exceeds $162 a fortnight or $4212 per annum; a couple loses after an income of $4288.00 per fortnight or $7488.00 per annum.
If a single self funded retirees income falls below $1896.00 per fortnight or $49296.00 a year, or a couples income falls below $2902.00 per fortnight or $75452.00 per annum they can claim a part age pension.

The government is using the means test of the age pension, that the pensioner on a modest extra income above the allowable income, before his/her pension is reduced by 50%, to subsidise the generous tax concessions for the self funded retirees; the cost of the tax concessions is now almost as much as the total cost of the age pension.
When the Howard-Costello introduced the obscenely generous tax concessions in 2007,it  was hardly mentioned by the media.

As it is now becoming obvious, that cost of the tax concessions are becoming unsustainable, the government should scrap the means test of the age pension and scrap all tax concessions for super.

What complaints would the self funded retirees have, if they were paid the full age pension, for losing the tax concessions for super?

A government in any civilised society should provide a basic living income for its retired citizens, but the government should not use a devious means test, so that citizens on modest incomes should not have to subsidise a luxurious lifestyle for the very rich.

The huge tax concessions for super do, and will in the future greatly contribute to Australia’s government debt problem. 

hawil wrote on Mar 28^th, 2017 at 11:20am:



What's the point of living if your so damn old & unhappy?

John Smith wrote on Mar 28^th, 2017 at 3:48pm:


Nah.  Just because she lives in her Home and has for decades, one which is worth net $800,000.00 does not mean she must be forced to sell up while her, let's say Sister, lives in her home which is worth net $300,000.00 and is not forced to sell.

The Home of anyone and everyone ought never be included in any pension means test.

Inheritance tax.  That's another issue, and one which was dealt a fatal bow decades ago with the abolishment of 'death duties.'

Even if it were brought in, I'd confidently expect the Home would never be included.

Get off the Pensioner's back Smith.  You'll be there one day.

Quote:


Sure, if they have rocks for brains.