DEBTS

Trump might win, and beware the turmoil

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Original article by Matthew Cranston
The Australian Financial Review – Page: 15 & 20 : 26-Oct-16

Hedge fund expert Jim Rogers says global financial market volatility is likely regardless of the outcome of the US presidential election. Rogers adds that a number of other factors will also contribute to looming financial market turbulence. He cautions against investing in bonds, and says investors should seek exposure to the agricultural sector, including farmland and agricultural futures. Rogers also says the Australian Government should take action to address the nation’s growing debt.

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QUANTUM FUND NV, APPLE INCORPORATED, AMAZON.COM INCORPORATED, GOOGLE INCORPORATED, MACQUARIE GROUP LIMITED – ASX MQG, PARAWAY PASTORAL COMPANY LIMITED

Foreign debt levels ‘extreme’

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Original article by Adam Creighton
The Australian – Page: 1 & 5 : 10-Oct-16

John Chambers, who heads the sovereign ratings committee of Standard & Poor’s, has warned that Australia’s "AAA" credit rating may be at risk. He has expressed concern about the nation’s rising net foreign debt, noting that it is among the worst of the 130 sovereign nations that the firm rates. S&P downgraded Australia’s credit rating outlook to "negative" in July 2016. Rival rating agencies have also previously expressed concern about Australia’s fiscal position.

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STANDARD AND POOR’S CORPORATION, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN LABOR PARTY, RESERVE BANK OF AUSTRALIA, MOODY’S INVESTORS SERVICE INCORPORATED, FITCH RATINGS LIMITED, AUSTRALIAN BUREAU OF STATISTICS, AUSTRALIA. PARLIAMENTARY BUDGET OFFICE, AUSTRALIA. DEPT OF FINANCE, AUSTRALIAN GREENS, WORLD BANK, INTERNATIONAL MONETARY FUND

$100bn hit to deepen budget debt crisis

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Original article by David Uren
The Australian – Page: 1 & 4 : 19-Aug-16

Chris Richardson of Deloitte Access Economics has warned that the Federal Budget may remain in deficit for some time. The Treasury has forecast that net debt will peak at $A356bn before falling to around $A335bn in 2021-22. However, Richardson’s analysis suggests that net debt could rise to $A440bn by 2021-22 if the nation records nominal GDP growth of 3.5 per cent and the Senate continues to reject the Government’s proposed spending cuts. May 2016 Budget forecasts are based on nominal GDP rising from 2.5 per cent in 2015-16 to five per cent by 2017.

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DELOITTE ACCESS ECONOMICS PTY LTD, AUSTRALIA. DEPT OF THE TREASURY, STANDARD AND POOR’S CORPORATION, RESERVE BANK OF AUSTRALIA

Australian debt control worst in G20: report

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Original article by Adam Creighton
The Australian – Page: 1 & 4 : 27-Jul-16

A Peterson Institute for International Economics report notes that Australia’s debt-to-GDP ratio has risen by 27.1 per cent since the global financial crisis. This is not much lower than the average increase recorded by developed nations such as the US, the UK, Japan and Italy. The report’s author, Paolo Mauro, concludes that Australia could have cleared its net debt and Budget deficit if real government spending had not significantly outpaced that of other major Group of 20 nations over the last eight years.

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PETER G PETERSON INSTITUTE FOR INTERNATIONAL ECONOMICS, GROUP OF TWENTY (G-20), INTERNATIONAL MONETARY FUND, AUSTRALIA. DEPT OF THE TREASURY, STANDARD AND POOR’S CORPORATION

Decade of despair: 10 giant surpluses needed to wipe debt

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Original article by David Uren
The Australian – Page: 1/ & 6 : 12-Jul-16

A report produced by Tony Makin and Julian Pearce of Griffith University highlights the challenge confronting the Australian Government in reining in the national debt. They estimate that it would need to achieve surpluses equivalent to 2.2 per cent of GDP each year over the next decade in order to eliminate net debt. This is much higher than the average surpluses achieved by the Coalition government of John Howard and the Labor governments of Bob Hawke and Paul Keating.

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GRIFFITH UNIVERSITY, LIBERAL PARTY OF AUSTRALIA, NATIONAL PARTY OF AUSTRALIA, AUSTRALIAN LABOR PARTY

Alarm over debt to GDP ratio

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Original article by Jacob Greber
The Australian Financial Review – Page: 4 : 30-May-16

Analysis by Morgan Stanley suggests that each additional $A1 of GDP in 2015 cost more than $A9 of debt to generate. Morgan Stanley economist Daniel Blake says Australia must find ways to generate economic growth that are less dependent on debt. He warns that the decline in the productivity of Australia’s debt is likely to increase the severity of any economic downturn that may occur. He also argues that tax incentives should encourage investment in innovation and business start-ups rather than residential property.

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MORGAN STANLEY AUSTRALIA LIMITED, MOODY’S INVESTORS SERVICE INCORPORATED, AUSTRALIAN LABOR PARTY

WA in $16b asset sale to fix budget

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Original article by Julie-anne Sprague, Tess Ingram
The Australian Financial Review – Page: 1 & 8 : 13-May-16

The Western Australian Government’s May 2016 Budget forecasts that the state’s deficit will blow out to $A3.9bn in 2017, while net debt will rise above $A40bn by 2019. Treasurer Mike Nahan has flagged plans to privatise some $A16bn worth of state assets, including Western Power, the TAB and Fremantle Ports. Nahan has stressed the need for asset sales to reduce the Budget deficit and to invest in new infrastructure.

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WESTERN AUSTRALIA. DEPT OF TREASURY AND FINANCE, WESTERN POWER CORPORATION, TOTALIZATOR AGENCY BOARD (WESTERN AUSTRALIA), FREMANTLE PORTS, HORIZON POWER, WESTERN AUSTRALIA. DEPT OF THE PREMIER AND CABINET, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, LIBERAL PARTY OF AUSTRALIA, NATIONAL PARTY OF AUSTRALIA, AUSTRALIAN LABOR PARTY, STANDARD AND POOR’S CORPORATION

$1 trillion foreign debt a rating risk

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Original article by David Uren
The Australian – Page: 1 & 6 : 12-May-16

Rating agencies have indicated that Australia’s ballooning foreign debt could prompt a review of the nation’s coveted "AAA" credit rating. Australia’s foreign debt has risen from 50 per cent of GDP to 62 per cent over the last three years, and it is now around $A1trn. Banks account for more than 50 per cent of Australia’s foreign debt, while the federal and state governments account for 25 per cent.

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STANDARD AND POOR’S CORPORATION, MOODY’S INVESTORS SERVICE INCORPORATED, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

Surpluses stockpiled to protect state for rainy day

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Original article by Rick Wallace
The Australian – Page: 6 : 28-Apr-16

Victorian Treasurer Tim Pallas unveiled the state’s 2016 Budget on 27 April. The State Government expects to achieve Budget surpluses of $A9.3 billion over the next four years. Capital spending has been increased to $A7 billion a year. Health and education will receive capital investment funding of about $A1 billion each. The Government intends to borrow up to $A16 billion, but it aims to keep net debt below five per cent of gross state product.

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VICTORIA. DEPT OF TREASURY AND FINANCE, AUSTRALIAN LABOR PARTY

Spending and taxing failures risk AAA: Moody’s

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Original article by Jacob Greber
The Australian Financial Review – Page: 1 & 6 : 15-Apr-16

Ratings agency Moody’s expects Australia’s debt to rise to about 38 per cent of GDP, compared with 35 per cent at present. Moody’s analyst Marie Diron notes that this has risen from just 11.6 per cent over the last decade, while the debt of other countries with a triple-A credit rating has averaged 41 per cent over this period. Diron adds that the Federal Government is unlikely to return the Budget to surplus by 2021 unless there is an increase in taxes.

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MOODY’S INVESTORS SERVICE INCORPORATED, AUSTRALIAN LABOR PARTY