Satyajit Das writes:
In a 29 November 2010 speech entitled The Challenge of Prosperity, RBA Governor sought to illustrate the combined effects of the gains of the appreciating terms of trade position and the A$ strength in the following terms: “In 2005 a shipload of iron ore was worth the same as around 2,200 flat screen televisions In 2010, the same shipload was worth around 22,000 flat screen TVs”. In a Freudian slip, the RBA Governor identified a fundamental issue with Australia’s economic model.
Australia may have substantially wasted the proceeds of its mineral booms, with the proceeds channelled into consumption. The nations did not channel enough into strategic long term investments or develop a new industrial base. According to one study, the commodity boom increased government revenues between 2002 and 2008 by around A$180 billion of which A$36 billion was used to repay public debt, A$69 billion was placed into the Future Fund (to meet the cost of public sector superannuation liabilities) and $75 billion was transferred to households in the form of tax cuts and payments.
Read more at EconoMonitor : EconoMonitor » Australia’s Economic Outlook—The Nauru Option?.
$75 Billion was a colossal waste of money that should have seen the present Government jettisoned at the last election.
$75 billion was returning back to taxpayers, of money which was already theirs! If a government accidentally raises too much revenue, via their policies which allowed business to flourish, then the only course of action, once you’ve already set up a future fund, an education fund, paid back all government debt, etc was to return the remainder back to the people that paid those taxes. Thank you John Howard.