Tuesday, February 10, 2009

Answers from Treasury

To the Senate Committee inquiring into the stimulus package, which reports tonight at 7.30 pm.

These are
my favourites:

Why does the government need to increase its borrowing limit to $200 billion?

"The Government is seeking to amend the Commonwealth Inscribed Stock Act 1911 to increase the limit on Commonwealth Government Securities on issue by $125 billion. This will allow the Government to finance the projected budget deficits of $118 billion over the forward estimates, as well as other financing commitments, such as student loans.

The Government’s borrowing requirement is due largely to the reduction in estimated tax receipts resulting from the deteriorating economic outlook and the unwinding of the commodities boom. Since the Mid-Year Economic and Fiscal Outlook, taxation receipts have been revised down by around $75 billion over the forward estimates.

These falls in tax receipts, along with higher payments associated with the weaker economic outlook, account for around two-thirds of the overall borrowing requirement."

When we spend money, where does it go?

"The flow of income after it is received by the retail trade industry can be broadly estimated using aggregates from the National Accounts (Australian Bureau of Statistics (ABS) catalogue 5206.0) and the Balance of Payments (ABS catalogue 5302.0).

The appropriate categories of imports are around 15 per cent of demand in the economy, implying that 15 cents of a dollar spend could be expected to be spent on imports. Of the 85 cents that is spent on domestically produced goods and services, on average 40 cents is paid in the form of wages, 35 cents accrues as profits and 10 cents is paid in the form of taxes."