Our economic black hole

Most discussions about economic issues, and the state of the State is no exception, usually resort to what Paul Krugman in the preface to his breezy offering The Age of Diminished Expectations described as ‘up-and-down economics.’

Professor Krugman said:

“Up-and-down economics is what one encounters on the business pages of newspapers, or for that matter on TV. It is preoccupied with the latest news and the latest numbers, hence its name:”According to the latest statistics, housing starts are up, indicating unexpected strength in the economy. Bond prices fell on the news…” This kind of economics has a reputation for being stultifyingly boring, a reputation that is almost entirely justified.”

But it’s all we get in Tassie. See for example award winning journo Sue Neales tackle an analysis of the latest Mid Year Financial Report released just prior to Xmas HERE:).

It’s little wonder that the level of debate that we are now experiencing and will have to increasingly endure over the next 2 months not only causes boredom but it fails to explain our predicament leading up to an important election for this State.

Financial illiteracy

 “Treasurer, is the Budget blowing out again”, asks Peter Gutwein, Shadow Treasurer in a Press Release dated 15^th September 2009. “Last year, in the midst of the Global Financial Crisis, the State Government managed to spend $311 million more than it budgeted”.

Quite correct. Mr Gutwein must be reading from page 10 of the Preliminary Outcomes Report released 14^th August 2009.

But then Mr Gutwein says “(t)his was despite Tasmania losing nearly $220 million in revenue in 2008-09.”

That is incorrect. Revenue was $103 million higher in 2008/09 than budgeted not $220 million less.

Mr Gutwein then intones“(w)e need financial leadership and vision, not spin and poor management”.

Agreed, but we also need people who can read a simple set of accounts.

Accounting for dummies.. a look at Forestry Tasmania

Media releases which accompany reports such as FT’s 2008/09 annual financial statements usually attempt to mislead rather than inform. The reliance on PR people who are obviously quite limited when it comes to interpreting economic and financial statements isn’t exactly designed to logically and coherently explain FT’s current situation to stakeholders.

Where did all the money go?

Where did the money go? The perennial question every time a company heads into bankruptcy.

It is of particular interest in cases of failed MIS companies for anyone trying to assess the effectiveness of the MIS model and the efficacy of Government policy in the important area of land use.

The recently fallen Great Southern Limited (GSL) represented 30% to 35% of the MIS industry in turnover terms. Whilst it has operated since 1987 it didn’t list on the ASX until 1999. There’s reasonably good data available from 1st July 1998 until 30th September 2008 which may shed some light on how the MIS industry has operated.

More info please

I agree with Matt ( Why there was no doorstop ). Avoiding doorstop interviews are minor misdemeanours.

Provided the Premier maintains continuous disclosure.

The Premier’s recent speech to the Party faithful echoes much of the State of the State speech in March 2009.Consider the much vaunted irrigation proposals (in March), which “revolves around the creation of a Statewide water economy to make Tasmania a foodbowl for Australia. “

PAL policy

The election campaign has already started if the weekend’s press reports are any guide.

Mr Will Hodgman will certainly bring a fresh approach to policy making if he replicates his recent parliamentary performance in the matter of the PAL policy.

The State is now without a Protection of Agricultural Land (PAL) policy.

FEA update

Forest Enterprises (FEA) announced to ASX on 26th June 2009 a lower than expected MIS sales figure for the almost completed year 2008/09(FY09). http://www.asx.com.au/asxpdf/20090626/pdf/31j8mn9qqfyr3x.pdf
And a lower than the hankered figure as per the ASX announcement of 27th May 2009.

The “sales are likely to be significantly less than the $60 million achieved in FY06 and FY07”.

Significantly less, that’s an unequivocal statement.