Where is all this money coming from?

Local Political strategist, John Robinson writes about the current serious financial woes facing the Queensland economy, after a decade of Labor rule.


I don't pretend to be an expert; just a layman with a healthy dose of concern.

Recently we saw revealed the payment of $1 million in commission over the placement of $100 million of Queenslander superannuation. Mr. Ross Daley, a former Labor staffer, accepted a secret $1 million success fee for shifting $100 million worth of superannuation funds from Sunsuper to the Trinity funds management group. Which beggars one obvious question. What other success fees / secret commissions have been paid in the past that Queenslanders know nothing about?

Labor in Queensland will have incurred an $85 billion debt by 2012. It’s in the budget papers. The question I think we also need to ask is whether anyone has benefited materially from the financial deals made. Based on a 1% success fee, it is possible by extension to suggest that someone, somewhere may have received an $850 million success fee. This will of course have been factored into the loan interest charged by the lenders. So again we Queenslanders need to fork out to pay for Labor fiscal management or lack thereof during the halcyon days.

One of Queensland’s major income areas has been from the mining industry. In June 2009 BHP Billiton announced settlements reached for most of its 2009 metallurgical coal contracts are for prices about 58% lower than last year. Blind Freddie would see that even a global turnaround tomorrow would get coal prices up to previous levels in one fell swoop. Those countries that need coal for industry, in particular China, are great negotiators. BHP Billiton will need to claw their way back up, dollar by dollar, year by year. Which is pretty pessimistic for Queensland government income over the next few years.

Has anyone wondered where is all this money coming from? The US has been loaned $trillions, Rudd has borrowed $300 odd billion and Queensland’s Anna and her fiscal wiz kid have placed us in hock for $85 billion. The Bank for International Settlements Working paper 286 released in July 2009 said in its precis:-

• “China’s emergence as a major player in world trade is well known, but its rising role in global finance is perhaps under appreciated. China is the second largest creditor in the world today, with a net creditor position of exceeding 30% of GDP in 2007.
  
  In this paper, we test the importance of growth differential, demographics, government debt, financial depth and the exchange rate in shaping China’s net foreign asset position. Our findings highlight the sharp fall in youth dependency as one key driver behind China’s puzzlingly large net lender position and also confirm the neoclassical prediction that faster growth attracts more capital inflows.
  
  Looking ahead, our findings also suggest that China is unlikely to turn into a meaningful net debtor nation over the next two decades. Moreover, we project that, as China engages in increased cross-border asset trade, its gross foreign assets and liabilities could triple in 10 years.
  
  While adjustments in China’s net foreign asset position are expected to be gradual and may thus facilitate its capital account opening, increasing exposure to external shocks and growing interactions with the rest of the world may present challenges both to China and to the global financial system.”

I think we are witnessing a major epoch unfolding; the fall of the United States of America as the world’s superpower. China with its huge population is not just taking its place; China will emerge as a mega-superpower.

Countries such as Australia will become beholden for their economic existence to what is decided in Beijing.

For me the question is also how far our political leaders at a State and Federal level will turn a blind eye to reports of human rights abuses, or the squashing of nationalist aspirations, or the imprisonment of Australian nationals, so as not to upset the ageing Politburo leadership who will in the future appear to have so much sway over our lives.