The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."
Friday, September 14, 2012
CBA: govt surplus will be $5.4bn deficit
"Scenario 1: Baseline. In our first scenario, we consider what would happen to Government finances if commodity prices and the terms of trade stabilise and don’t rebound as most forecasters expect. Nominal growth would track sideways from this point in line with real GDP, equating to 3.4% in financial year average terms. Because national income growth remains soft, revenue tracks sideways and undershoots expenditure.
Under our baseline scenario of no change in the growth rate, this year’s negligible surplus turns to a deficit of $5.4bn. Deficits grow to 1.7% of GDP by 2015/16. Net debt in this scenario rises throughout the forecast period and peaks at 12% of GDP. New CGS issuance volumes are steady at around $19bn per annum (in addition to refinancing of maturities).
For the Budget balance to breakeven, we estimate that year average nominal growth would need to rise to 4.6% (1.2% above the current level)."