Thursday, May 17, 2012

Hold on to your hats. Hockey takes us through the budget fiddles

It's not pretty.

From Wednesday's National Press Club address:

"The Treasurer is projecting an extraordinary drop in spending in just one year, which happens to be the year he promises a surplus:

"A large chunk of this spending pause is achieved by artificially bringing forward spending into the current financial year which finishes on June 30. Of course the taxpayer money will still be spent…it is just an accounting trick to cook the books.

We already know that the Government is taking a novel approach to compensation for injury by paying $1.5 billion to people this year before the carbon tax actually starts on 1 July.Although if you believe their ads it has nothing to do with the carbon tax….they just want to believe their ads it has nothing to do with the carbon tax….they just want to give you money.

"We also know that the Coal Sector Jobs Package seems to save jobs this year, give up on jobs next year but then it has a change of heart and starts saving jobs the year after and in
subsequent years.

It seems as though nation building also takes a holiday in 2013 as the Government brings forward $1.3 billion of spending a few months so it does not appear in next year’s accounts.

"And of course there seems to be just one year, the first surplus year, when we don’t have to spend money on clean energy, but every other year we need to spend over $1 billion.

"But wait there is more. By paying Local Councils $1.1 billion in grants just a few weeks earlier, the Government is able to further artificially reduce expenditure next financial year.

Other money shuffles such as the panicked changes to the Schoolkids cash splash have increased expenditure this year and artificially reduced expenditure next year.

Additionally the Government is relying on a surge in revenue in its surplus year. They expect to collect an extra $39 billion in revenue in the next twelve months and this magic carpet will take them from a $44 billion deficit to a $1.5 billion surplus.

"As you can see revenue next year is also artificially inflated with special one off dividends such as those from EFIC and the Reinsurance Pool Corporation.

In addition to these fiddles the Government is pushing expenditure out into future years. It is a burden we will have to deal with.

The “delay” in the Joint Strike Fighter program along with other adjustments to the Defence
capital equipment program delivers savings over the four years of $5.5 billion. But it still
must eventually be paid.

Then there is the pipeline of big new spending commitments but with only nominal funding

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