noco, it would be helpful if you copy the text or do a screen shot so I don't have to subscribe to Ruperts biased paper... ohh hang on... that's probably the idea.
Are you are you a stooge for the Big L top end of town, discretely trying to redistribute the wealth from the masses to the few?
For what it's worth Swan was not a great treasurer... and who's still getting $900 cheques?
ALARM over the rising Australian dollar has spurred the Abbott government to develop contingency plans for a global shock amid fears the US will fail to settle its damaging political row on economic policy.
Cabinet ministers have set on the strategy after being warned that US authorities could continue their monetary stimulus for longer than first thought, renewing the upward pressure on the Australian currency.
The policies will deepen the budget deficit to $40 billion this year and possibly more after Joe Hockey yesterday poured cash into the Reserve Bank to give it the "ammunition" to deal with any shockwaves.
The Australian can reveal the government initially planned to inject roughly $6bn into the central bank and add more over time but changed this to an immediate $8.8bn payment after briefings on the threats to the global economic outlook.
The changes came after the Treasurer and Reserve Bank governor Glenn Stevens returned from a global summit in Washington DC earlier this month that deepened government concerns about a hit to economic growth.
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Recommended Coverage Joe should dampen meltdown fears JOE Hockey has returned from Washington deeply worried that continued instability in the US may precipitate a new global crisis. Medibank wants to cut red tape MEDIBANK Private has aggressively lobbied the Commonwealth for a series of health insurance reforms. Environment axings as budget slashed THE Environment Department will cut 150 jobs over the next two months. End of sidebar. Return to start of sidebar.
Tony Abbott acknowledged the pressure on the budget yesterday as he called for "bold" recommendations from a new Commission of Audit aimed at cutting expenses, conceding there would be changes that people did not like.
The Reserve Bank warned last year of the need for "rebuilding capital" and will reveal in its annual report today that its reserve fund stands at $2.5bn compared with $6.9bn before the global financial crisis. Mr Hockey blamed Labor for taking dividends out of the central bank in recent years when it should have been shoring up its reserves, as he acknowledged his move would widen this year's deficit. "Our institutions must be at their absolute strongest to deal with the challenges in the days, the weeks and the months ahead," the Treasurer said.
"And the Coalition government will not allow our institutions to be in any way weakened - we need all the ammunition in the guns for what's before us, and this is part of that equation."
Former treasurer Wayne Swan lashed out at the comments by insisting he would have transferred funds to the Reserve Bank if it had sought the help, suggesting it had not asked for the cash.
Correspondence released in April under Freedom of Information laws showed the Reserve Bank urged the government to let it keep all its earnings, saying the money was needed to build up the reserve fund.
Mr Swan said it was "not unreasonable" to conclude that Mr Hockey was deliberately increasing this year's deficit to make future budget improvements look more dramatic.
Combined with the federal cabinet decision to lift the commonwealth debt limit to $500bn, the payment to the RBA is aimed at building up the capacity to deal with slower growth and a rising currency.
If nominal growth is slower than expected next year, tax revenue will fall short of forecasts and the deficit will deepen further, forcing the government to borrow more and take gross debt to as much as $450bn over time, according to market analysts.
The government's contingency plans are aimed at preparing for continued monetary stimulus in the world's largest economy as the US Federal Reserve delays the "tapering" of its policies to increase money supply.
The meetings in the US earlier this month, where Mr Hockey and Mr Stevens spoke to finance ministers and central bank governors from the Group of 20 nations, confirmed expectations the monetary stimulus would continue longer than previously thought. A rising currency would hurt local exporters, curb economic growth and increase the budget deficit.
The Australian dollar hit US97.6c yesterday, its highest level since May, following the release of a larger than expected increase in inflation in the June quarter. However, in a day of highly volatile trading, it dropped back to US96.4c following a big fall in the Japanese sharemarket.
Mr Hockey said the Australian economy was "growing as it should be" and emphasised the commonwealth's AAA credit rating, but also expressed concern the US would be unable to fix its domestic dispute over economic policy. While the US congress struck a provisional deal on the debt ceiling to ease fears of a default, it is expected to enter another round of brinksmanship next year ahead of the nation's mid-term elections in November.
"The United States has not resolved its structural issues, it has not resolved them," Mr Hockey said. "They've kicked the can along the road closer to the mid-term elections. I don't see a way forward out of that. We are not going to allow Australia to become in any way as vulnerable as the United States or some other jurisdictions may be over the months and years ahead."
Economists backed the move to increase the Reserve Bank's capacity. "It seems fairly routine, but it does give the RBA more firepower if there was an unexpected event - that's one of the reasons the reserve fund exists," said JP Morgan chief economist Stephen Walters.
Mr Walters noted that his US colleagues had pushed back their estimate of the timing of the first "taper" of the US monetary policy until April, meaning the US dollar would be weaker for longer and there would be more support for the Australian dollar. "Parity against the (US dollar) is possible, but is not our base case," he said.
Westpac chief currency strategist Robert Rennie said the injection would give the Reserve Bank the strongest capital position it has had since the 1970s.
"It looks a lot more like a rainy day fund than it has for much of its last two and a bit years," he said.
Coalition and Labor governments have taken huge dividends from the RBA over the past decade, making it harder to build up the reserves.
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BTW. the subscription is only about $11 per month