Saturday, May 04, 2013

Australia's Financial Situation

A prominent and highly successful financial guru wrote this short piece about budgetary plight.

You probably heard Julia Gillard’s speech yesterday saying how bad our financial situation had become, which is in stark contrast to Wayne Swan going about saying we’re doing better than everybody else. As I’ve said many times at seminars, it’s a bit like a one armed man saying I’m better off than a man with no arms at all.

The harsh reality is that this government has got us into debt of nearly $300 billion and the servicing cost of this is over $15 billion a year.

The incoming government has an horrendous task, they first have to bring the budget back to surplus and then make that surplus big enough to pay back $300 billion. It would take 50 years at $20 billion a year. Looks like our great grandchildren will be paying it.

There was one point that has not been highlighted. The government’s revenue has NOT fallen - it is simply less than they expected. The problem is that expenditure has not been cut to match the fact that receipts were less than budgeted for, even though they are more than last year’s.

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