Category Archives: Government

Australia’s Foreign Debt

In the public interest. Australia’s public debt was in the black in 2006-2007. The Global Financial Crisis in 2008 was what pushed Government debt into the red. This impacted sovereignty and independent decisions from a government perspective.

Refer Net foreign debt by institutional sector (public vs private) 2006-2007

Australia’s foreign debt: a quick guide

28 October 2014 

PDF version [310KB] Anthony Kryger
Economics Section

This quick guide looks at the level of Australia’s foreign debt, the interest liability on foreign debt and how these have changed over time. It also looks at foreign debt as a component of net foreign investment, the other component being equity investment. Finally, given that Australia’s gross foreign debt is now bigger than its annual gross domestic product (GDP), the quick guide also considers whether our foreign debt level is too high.

What is foreign debt?

Foreign debt is the amount borrowed from non-residents by residents of Australia. It includes securities such as bonds, as well as loans, advances, deposits, debentures and overdrafts.
Foreign debt is a subset of the financial obligations that make up Australia’s foreign investment position.  It is distinguished from other forms of foreign investment capital inflow such as equity investment (foreign ownership) by the obligation to pay interest and/or repay capital.
Foreign debt is not to be confused with national debt, which is the total government debt. National debt comprises government borrowings from overseas residents and government borrowings from Australian residents and thus excludes overseas borrowings by the private sector.
A distinction is made between gross and net foreign debt. Gross foreign debt is the total amount of borrowing from non-residents. Net foreign debt is equal to gross foreign debt minus the sum of lending by residents of Australia to non-residents and official reserve assets held by the Reserve Bank.

Level of foreign debt

Table 1 below shows that in June 2014 the size of Australia’s gross foreign debt was $1 693 billion. Foreign debt rose rapidly from June 1984, after remaining fairly low and stable during the late 1970s and early 1980’s. Much of the increase in foreign debt since the mid–1980s can be traced to the private sector and is attributed to financial deregulation, globalisation and the significant increase in mining production financed by foreign savings. In the 30 years from June 1984 to June 2014, the dollar value of Australia’s gross foreign debt increased at an annual average rate of 12.3 per cent.
While concern might be expressed about the size of Australia’s gross foreign debt, Australia also lent money overseas. That is why the more meaningful figure is net foreign debt. After deducting Australia’s reserve assets and lending abroad, the level of net foreign debt in June 2014 was $865 billion. From June 1984 to June 2014, the dollar value of Australia’s net foreign debt increased at an annual average rate of 11.6 per cent. This is less than the corresponding figure for gross foreign debt, indicating that over the past 30 years Australian lending abroad has increased at a faster rate than Australian borrowing abroad.
As a proportion of GDP, the size of Australia’s net foreign debt has increased considerably more than threefold from 15.2 per cent in June 1984 to 54.6 per cent in June 2014. While expressing net foreign debt as a percentage of annual GDP shows its significance relative to the size of the overall economy, and reflects to a degree the economy’s capacity to repay the debt, it does not mean that this proportion of GDP must be applied to the repayment of debt. GDP is a flow of goods and services during a period, while foreign debt is a level at a point in time which will involve interest and repayments of principal over many periods into the future. (See section following for discussion of interest on net foreign debt.)

Table 1: Foreign debt and interest on foreign debt

 Gross
foreign debt
Net
foreign debt
Interest
on
net
foreign
debt
  $m %
of GDP
$m %
of GDP
$m % of
exports
1983-8451,731 24.2 32,492 15.2 3,412 11.8
1984-8576,735 32.6 54,138 23.0 4,890 13.6
1985-86104,363 40.0 80,098 30.7 6,166 15.8
1986-87125,574 43.8 90,310 31.5 7,313 16.5
1987-88140,996 43.3 98,665 30.3 8,051 15.5
1988-89163,592 44.3 114,598 31.0 9,803 17.6
1989-90186,471 46.1 130,999 32.4 12,861 21.0
1990-91200,119 48.2 142,849 34.4 12,556 18.9
1991-92 220,674 52.2 161,651 38.2 11,196 15.9
1992-93241,200 54.3 175,799 39.6 9,663 12.4
1993-94 249,634 53.5 169,420 36.3 8,992 10.7
1994-95271,955 54.8 188,427 38.0 9,795 11.1
1995-96279,915 52.9 190,999 36.1 10,778 10.8
1996-97307,858 55.3 205,313 36.9 11,140 10.5
1997-98352,743 59.9 223,125 37.9 10,829 9.4
1998-99366,760 59.1 225,327 36.3 10,802 9.5
1999-00425,070 64.3 266,734 40.3 13,747 10.7
2000-01506,419 71.8 295,880 41.9 15,096 9.7
2001-02545,761 72.4 316,712 42.0 14,090 9.0
2002-03597,316 74.5 348,471 43.5 12,014 7.9
2003-04675,114 78.3 378,991 44.0 12,775 8.7
2004-05743,190 80.5 421,888 45.7 16,874 10.1
2005-06881,557 88.3 489,461 49.0 18,822 9.6
2006-071,030,271 94.7 535,964 49.3 25,884 12.0
2007-081,121,060 95.1 599,314 50.8 28,659 12.3
2008-091,204,683 95.7 620,034 49.3 29,959 10.6
2009-101,295,078 99.9 675,246 52.1 26,560 10.5
2010-111,303,837 92.7 671,174 47.7 26,501 8.9
2011-121,434,224 96.5 746,170 50.2 25,220 8.0
2012-131,560,665 102.4 796,595 52.3 20,274 6.7
2013-141,692,501 106.7 865,462 54.6 23,307 7.0

Source: Australian Bureau of Statistics (ABS), Balance of payments and international investment position, cat. no. 5302.0, ABS, Canberra, June 2014.

Interest liability on net foreign debt

In 2013–14 a total of $23 billion was paid in net interest overseas. The net interest paid adds directly to the current account deficit.
As with foreign debt, it is useful to obtain a measure of the relative size of interest on foreign debt. The method most commonly used is to express net interest payments as a percentage of export earnings (goods and services credits), or the debt service ratio. This emphasises the international liquidity aspects of interest payments since exports provide a source of foreign exchange income that can be applied to interest payments. The debt service ratio enables more meaningful comparisons over time since both interest and exports are affected by inflation.
As shown in Table 1, Australia’s debt service ratio increased through the latter half of the 1980s to peak at 21.0 per cent in 1989–90. It later fell to 7.9 per cent in 2002-03 before rising again to 12.3 per cent in 2007–08. It subsequently fell once more and in 2013–14 Australia’s debt service ratio was 7.0 per cent. In other words, in 2013–14 the equivalent of 7.0 per cent of the value of goods and services exported was required to pay the interest liability on Australia’s net foreign debt.

Net foreign debt by institutional sector

Debt liabilities can be held by either the public or private sector. The public sector comprises Commonwealth, state and local governments, as well as the Reserve Bank and other public sector corporations. The private sector comprises private financial and non-financial corporations. The public and private sector components of net foreign debt show markedly different trends over the past couple of decades. Net foreign debt of the public sector fell from $70 billion in June 1996 to a low of -$16 billion in June 2007 (when the Australian public sector became a net lender to the rest of the world). This is largely attributed to declining federal budget deficits and the emergence of budget surpluses over this period. The Global Financial Crisis of 2008–09 saw a return to budget deficits and an increase in public sector foreign debt. By June 2014 the net foreign debt of the public sector had risen to $226 billion. Net foreign debt of the private sector on the other hand, rose steadily from $121 billion in June 1996 to $582 billion in June 2009, falling briefly before rising again to $639 billion in June 2014. (See Table 2.) Significantly, the largest portion of net foreign debt has always been held by the private sector. The private sector accounted for almost three-quarters of Australia’s net foreign debt in June 2014. At the beginning of this century it was close to 100 per cent. Private sector foreign debt is considered preferable to public sector foreign debt as the private sector borrows only if the returns from investment are expected to be greater than the interest payable. Such investment improves the efficiency and competitiveness of firms.

Table 2: Net foreign debt by sector

 Public sector Private sector
  $m % of total $m % of total
1993-94 59,724 35.3 109,696 64.7
1994-95 69,939 37.1 118,488 62.9
1995-96 70,226 36.8 120,773 63.2
1996-97 65,268 31.8 140,046 68.2
1997-98 45,417 20.4 177,708 79.6
1998-99 34,597 15.4 190,730 84.6
1999-00 18,678 7.0 248,056 93.0
2000-01 5,915 2.0 289,966 98.0
2001-02 11,477 3.6 305,235 96.4
2002-03 8,466 2.4 340,005 97.6
2003-04 5,331 1.4 373,660 98.6
2004-05 10,834 2.6 411,054 97.4
2005-06 5,993 1.2 483,468 98.8
2006-07 -15,619 .. 551,583 ..
2007-08 32,610 5.4 566,704 94.6
2008-09 37,755 6.1 582,280 93.9
2009-10 112,136 16.6 563,110 83.4
2010-11 146,128 21.8 525,047 78.2
2011-12 216,303 29.0 529,867 71.0
2012-13 204,508 25.7 592,087 74.3
2013-14 226,204 26.1 639,258 73.9

Source: Australian Bureau of Statistics, Balance of payments and international investment position, cat. no. 5302.0, Canberra, June 2014. To the extent that only public sector debt has to be paid back with tax revenue, it is useful to see what change has occurred in the level of per capita real (i.e. after adjustment for inflation) net foreign debt of the public sector. After falling to a low of -$899 in June 2007, per capita real net foreign debt of the public sector rose steeply and in June 2014 it was $9 521, which is the highest it has been for at least the last 20 years.

Net foreign investment—debt and equities

Borrowing is only one kind of capital inflow, the other main one being investment in ownership of Australian assets including shares, property and the retained earnings of foreign owned companies. Capital transfers (debt forgiveness involving the cancellation of liabilities by mutual agreement between creditor and debtor, and migrant transfers) is another category of capital inflow, but is relatively small. Chart 1 shows that in the early 1980s well over half of Australia’s net foreign investment was in the form of equities. From 1983, however, that situation reversed with debt accounting for 51 per cent of net foreign investment in that year and climbing to well over 70 per cent in the latter half of the 1980s and for most of the 1990s. By the beginning of the 2000s it had climbed to above 80 per cent, and by 2013 it accounted for 96 per cent of net foreign investment.

Chart 1: Net foreign investment – debt and equity – percentage share

Chart 1: Net foreign investment – debt and equity – percentage share

Source: Australian Bureau of Statistics, Balance of payments and international investment position, cat. no. 5302.0, Canberra, June 2014.

Is Australia’s foreign debt too large?

While the size of Australia’s foreign debt is large, especially when compared with the Commonwealth’s net debt figure (expected to be $192 billion in 2013–14), it is not often talked about. One reason for this is that it hardly represents anything new. Australia has always been a net recipient of overseas funds because investment opportunities in Australia have always exceeded what can be funded from the domestic savings of its population. This has led to capital inflow that has built up capital, income and wages, but has also increased our net foreign liabilities, most of which are foreign debt rather than foreign equity.
The size of Australia’s foreign debt would be a cause for concern if it was mainly caused by increased consumption rather than increased investment, raising concerns that Australia was living beyond its means. However, Australia’s national saving and national investment levels are both above their long-term average, suggesting Australia is well able to cover the servicing of its debt.
Finally, while Australia has a gross foreign debt that is almost the size of its annual GDP, the more meaningful figure is net foreign debt which is just over half as big, and of this about a quarter is held by the public sector. Since only the portion of foreign debt held by the public sector is liable for repayment by the taxpayer, only this portion has budgetary implications.

© Commonwealth of Australia

Snowden Cell Phones Spying and ID

In the public interest.

I give no consent to my location, ID and my data being gathered (bulk connections). I have nothing to hide but I like my privacy as a woman. I realise the company’s believe they own my data and believe they can sell it. I do not give consent.

Susan Carew

NOTES: Snowden’s comments –

Central problem is you do not know what the phone is doing!

According to Snowden you can turn off your phone but how do you know it is off he says. Old phones mean you can take the battery out that stops signals. The phones now are sealed. Airplane mode doesn’t turn off wifi. We don’t know what the phone is doing or what it is connected to? Apps talk want it to stop after using e.g. messenger, weather app. People need to be able to make intelligent decisions not just app by app on a connection by connection basis. You may use Facebook – want to connect to Facebook content servers, want to be able message a friend but you don’t want it to talk to an ad server or analytics server or third party (monitoring your behaviour). Facebook crams them (third party) into every app you download, you don’t know as you can see it, problem with data collection today. Industry built on keeping this invisible. Need to make activities of our devices (iPhone, computer) more visible and understandable to the average person and give them control. Say there is a little green icon spokes coming off, every app your phone is talking to, all hosts talking to. Once every 3 seconds phone is checking in with Facebook. No-one wants spying. If people could press a button to turn off apps ie. Facebook etc. People would want no spying. Google and Apple do not allow the button to exist. If the companies think it is not understood, too complex then it needs to be simplified. It is a problem.

Stories data breached, companies spying here or there, manipulating purchases, search results, hiding things on your timeline – influence and manipulate in different ways. Happens as a result of single problem – which is inequality of available information. They can see everything about you , what you device is doing, they can do anything with your device. You paid for the device, increasingly governments and corporations own it. we do all the work, pay taxes, costs… People work hard but they are owning less. The young people do not know what they are losing.

Data became a commodity, valuable to Google an social media platform, making billions of dollars earned, people are accustomed, difficult to turn that horse around. Snowden says money becomes power and influence. Information becomes influence.

Surveilance states they won’t relinquish as they embed this reality. The permanent record is the story of our lives.

Permanent record is the subject of the book.

You life how intentionally BY DESIGN both government and corporate realised it was in their mutual interest to conceal data collection activities to increase the breadth and depth of their sensor networks spread out throughout society. Back in the day Intelligence collection in US (sigin) was sending FBI agent to put alligator clips in a building, or disguised as a workman bug in a building or built satellite listening, in desert, parabolic collector listening to satellite emissions. Satellite links were owned by military and exclusive to government not affecting everyone broadly, all surveillance was targeted. What changed with technology was surveillance becomes indiscriminately, dragnet, ‘bulk collection’ should become dirties phrases in the language if we have decency. This this was intentionally concealed from us, government did it used classification, companies did it, denied it, they say you agreed to this. You didn’t agree to anything. They say they put Terms of Service page up, you clicked. You clicked a button said I Agree when you are trying to open an account to talk to friends, email etc. You were not agreeing to 600 page legal form, even if read you wouldn’t understand. Even if did, the first para says this agreement can be changed anytime by the company.

NOTE: They built a legal paradigm that presumes RECORDS collected about us DO NOT BELONG TO US. This is one of the core principles on which mass surveillance from the government perspective in US is legal. Government says it is legal, it is fine. Our perspective as a public, says that is the problem this isn’t okay, the scandal is not in their breaking the law, it is in that they DON’T HAVE TO BREAK THE LAW. It is called a third party doctrine, legal principle Smith vs Maryland. Established a precedent that the record don’t belong to the guy they belong to the company. The company has ownership over records, back in 1970s. Still relying on this precedent. No-one has a privacy right over their lives (data collection). Not data being manipulated but PEOPLE being MANIPULATED.

MY COMMENTS:

Everyone jumps on the bandwagon to make money without a backward glance to the social cost to democracy.I personally do not feel safe and I do not want people I do not know where I am and gathering my data about what I do, where I go, who I speak to, who my friends are. I don’t want people accessing my blog if they are monitoring me rather than reading my blog out of interest. It is a form of surveillance. This feels to me like stalking. I am alarmed by the facts raised above that my data is not mine, YES IT IS. What I am doing now is my thoughts on a page they do not belong to WordPress, the IP company or those surveilling me. I revoke other rights that state I have agreed, I haven’t. This provides insights into FOI requests and why no data is forthcoming. I am not fully informed.

In addition:

I have real concerns about the medical effects cancer and EMF with iPhones. This is a real problem.

The apps are companies they are not just little icons (analytics) and it is too much for the average person to understand and make clear decisions.

The homeless guy living in the bush I met recently is probably right to be there. He is free. He is not accessing digital. He has let go of this society. I can understand why that is a good thing.

Link to Snowden’s paper (Introspection Engine [iPhone 6]: https://boingboing.net/2017/09/08/impaired-judgment-phones.html

UK Parliament Emotionally Charged Debate

I felt the anger in this debate and it reiterated for me what Greta has said about adults letting children down.  You can see and hear that they do not know how to resolve conflict, they are not mature enough to deeply listen to others and respect all voices. This is the nature of a true parliament.  Unfortunately the people attracted to politics are often into power, placed in there by those in power with agendas and are willing to compromise who they are in order to get what they think they want.  Yet in truth surrender is the highest power, listening is the deepest respect and change is how we all grow.  Those critics are our greatest teachers as they show us to ourselves.  When we react it reveals we are unhealed, as pain is there, vulnerability is there, fear is expressing as they are not coping.  It reveals poor governance and self interest this is how divisions and parties disintegrate.

An adversarial system in my view is counter productive. We need to develop inner truth and values where a person speaks up not to tow the party line but speaks in accordance with conscience and inner feeling.  If we want a higher level of governance and a future that thrives, we have to learn to listen deeply to ourselves and others.  The wisdom is not far from the surface but typically we seek to out smart the other, put them down, pretend we are powerful rather than put the ego to the side and really creatively work on solutions. 

Inherent within all problems is a solution, you have to learn to see differently.

Allegations of Pedophile Ring within Department of Foreign Affairs

In the public interest.

https://www.smh.com.au/national/alleged-pedophiles-referee-faced-child-sex-charges-20040326-gdilzu.html

This was back in 2004.

Alleged pedophile’s referee faced child sex charges

 

A former diplomat who was brought back to Australia to face child sex charges, John Holloway, was one of the referees who helped his colleague, alleged pedophile Robert Scoble, move to a new job at Telstra.

Scoble – arrested in Bangkok last week on pornography charges – reported to Mr Holloway in 1984 and 1985 while he was under internal investigation by the Foreign Affairs Department for procuring and disseminating sex photos of children as a diplomat.

Despite two incidents and two investigations within a year, Scoble left the department with glowing references from his superiors for a career as a Telstra executive in South-East Asia.

 

Mr Holloway’s involvement in the saga has raised questions about the findings of a report commissioned by the Government in 1996 to examine the allegations of a pedophile ring within the department.

It found that the department did not cover up Scoble’s activities, because those who spoke to Telstra were not aware of the investigations into his activities.

 

Yet the report also found it was “probable” that Scoble’s branch head – now identified as Mr Holloway – had told Telstra Scoble was held in “extremely high regard”, paving the way for the job.

Mr Holloway held the Canberra post of branch head, South-East Asia, at the time Scoble was being investigated and his subsequent departure for Telstra.

Scoble was a senior diplomat in Hanoi at the time, including stints as acting ambassador.

 

There are other inconsistencies in the inquiry report’s claim that no referees were aware of the investigation into Scoble.

Richard Broinowski, a former ambassador to Vietnam and another of Scoble’s referees, attended an interview by an officer when Scoble was being questioned about using a diplomatic bag to send photos of naked young men to a colleague.

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Professor Broinowski yesterday recalled the interview and said he was aware of an investigation. But he reiterated that he was only aware of one photo, in which the young male subject was clothed, and he believed Scoble’s assurances that he was not a pedophile.

In another twist, the inquiry into claims of pedophilia within the department was launched by the Foreign Minister, Alexander Downer, just weeks after Mr Holloway was arrested and brought back to Australia to face charges under new child sex laws.

The high-profile case – Mr Holloway had been Australia’s ambassador to Cambodia – involved a charge that Mr Holloway had had sex with a 14-year-old Cambodian boy. Two Cambodian youths were brought to Australia by Federal Police to testify.

Mr Holloway denied the charge and said he had never been a pedophile. He was acquitted after the magistrate, Michael Somes, said the two young witnesses gave inconsistent evidence.

That acquittal occurred in the middle of the inquiry into Scoble’s activities. The final report by Pam O’Neil made no reference to Mr Holloway’s participation in the case. Mr Holloway, understood to be abroad, could not be contacted.

 

The department would not comment on Mr Holloway’s role in the Scoble affair. But it said it had introduced widespread reforms of its practices in the late 1990s and no pedophile activity had been reported among Australian diplomats since.

Scoble has been granted bail by Thai authorities after being charged on Saturday with distributing pornography and employing an unregistered worker.