Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.


 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate

Subscribe!
Subscribe





On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.
___________

Syndicate
RSS/XML


RSS 2.0

Budget cuts? You must be kidding.

By David Leyonhjelm - posted Thursday, 27 December 2018


If the Government’s financial statements were subject to the same rules as a private company, Treasurer Frydenberg and Finance Minister Cormann would be at risk of going to jail.  They are the Commonwealth Government’s version of the dodgy brothers.

Their mid-year budget update has more shifting of the goal posts than the Darwin Football Club at Christmas in 1974.

For years the Coalition Government has promised that their decisions to spend more would be fully offset by decisions to spend less. Yet in May, at Budget time, the Coalition creatively re-interpreted this commitment to exclude the financial year in which the budget was announced — 2017-18. 

Advertisement

This exclusion allowed the Coalition to make new spending decisions without offsets.  All it needed was to get the money out the door before 1 July 2018. 

There were various ways it did this, such as the $443 million grant to a charity called the Great Barrier Reef Foundation.  It also threw $500 million at the Defence Department, only to announce a claw back of $488 million of this over the subsequent four years.  According to the Coalition’s reinterpreted commitment, the $500 million splurge was ignored while the $488 million claw back can be counted as a spending cut demonstrating the Coalition’s fiscal virtue.

Now, in the mid-year budget update, the Coalition’s commitment to offset new spending is more tortured than a visitor to a Saudi embassy.

The Coalition has made decisions to increase net spending by $2.5 billion extra this year, $3.6 billion extra next year, and around $3 billion extra in each of the subsequent years.  So the Coalition is not offsetting decisions to spend more with decisions to spend less, although it claims it is.

The Coalition says it is meeting its commitment if, when calculating the impact of its spending decisions, it includes the downward revision of previously over-stated spending forecasts. By this logic, if the Treasury bureaucrats accidentally add on an extra zero in their spending forecasts, then discover the error and take off the extra zero at the next budget update, the Government can declare that it has made a tough decision to cut spending.

In other words, to assess the Coalition’s spending decisions, it wants us to include changes to spending forecasts that have nothing to do with its decisions. Even worse, it only adds some of the corrections of previous forecasting errors into its calculations and doesn’t set out which corrections are included and which ones are not.

Advertisement

This suggests that Australia’s budget documents are being prepared by creative accountants in cahoots with lawyers from Shyster and Shyster.

But there’s more. The Coalition had to further torture its commitment to offset all new spending, because even after adding in the correction of previous forecasting errors, it found that it was still increasing net spending.

So it decided to say that one of its spending increases — providing early access to welfare for migrants and more welfare to families on six-figure incomes — wasn’t actually a Coalition spending increase.  It excluded this billion‑dollar spending increase from its calculations and, hey presto, it can now pretend that its decisions involve a net reduction in spending.

It seems the Coalition has taken a tip from Shaggy and, when confronted with its licentious spending, is protesting ‘It Wasn’t Me’.

This begs the question: if this billion dollars of extra Government spending on welfare wasn’t done by the Coalition, then whose spending was it?  Who is in charge?  Has there been a coup?  Does Bill Shorten have the keys to the Treasury vaults?

The best excuse the Government can come up with for its extra billion dollars of welfare spending is that ‘the Senate made me do it’, even though the Government never attempted to put its policies to the Senate without the billion‑dollar sweetener.

It’s pathetic.

The Coalition’s commitment on reducing net spending is mortally wounded.  But like the Black Knight in Monty Python’s Holy Grail, it pretends that any weakening of the commitment is merely a flesh wound.

With their grandiose claims of fiscal wizardry wrapped up in a thin veil of authority, the Treasurer and Finance Minister remind me of the Wizard of Oz.  When Dorothy discovered the Wizard was a charlatan and said, ‘Oh, you’re a very bad man’, the Wizard replied, ‘Oh no my dear. I'm a very good man. I'm just a very bad Wizard.’

  1. Pages:
  2. 1
  3. 2
  4. All

This article was first published in the Australian Financial Review.



Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

9 posts so far.

Share this:
reddit this reddit thisbookmark with del.icio.us Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

David Leyonhjelm is a former Senator for the Liberal Democrats.

Other articles by this Author

All articles by David Leyonhjelm

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Photo of David Leyonhjelm
Article Tools
Comment 9 comments
Print Printable version
Subscribe Subscribe
Email Email a friend
Advertisement

About Us Search Discuss Feedback Legals Privacy