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Day to Day Politics: Budget or plan, it’s still bullshit.

Sunday 29 May 2016

I ran my own small business most of my working life. In doing so I annually produced a budget. It was only ever a guide because I knew that there were a number of factors that could throw my assumptions completely out. They were assumptions that often were out of my control. For example my sales revenues could be badly affected during the course of the year, or if I lost a customer or a large order.

Now comparing my annual million dollar turnover with that of the Australian trillion-dollar budget might sound rather simplistic but the principle is still the same. The outcomes of both rely on assumptions. Sometimes you get it right and sometimes you don’t. They rely on best guess assumptions on best available information.

Now last Friday week, as is required by the Charter of Budget Honesty when an election is called, the Secretary of the Treasury, John Fraser, and the Secretary of the Finance Department, Jane Halton, were required by law to publish a true and honest assessment of Australia’s national finances within 10 days. It is a totality unbiased, apolitical appraisal of the current financial position and the state of the books. It is known as the Pre-Election Fiscal and Economic Outlook. It was introduced by Peter Costello and if we didn’t have it, well frankly politicians could tell you whatever they liked and it could go unchallenged.

So when the two secretaries issued their statements they said that the figures were all upfront. The size of the deficit published in the federal budget only a couple of weeks before, was accurate.

All looks good doesn’t it? But here comes the crunch. They seriously challenged the “assumptions” on which the numbers are founded.

They used the quaint word “benign” to describe the assumptions.

Fraser and Halton warned that all the official assumptions, “Should Australia experience a significant negative economic shock, the fiscal position would be expected to deteriorate rapidly”.

Meaning it wouldn’t take much to put us up shit creek. Their main concern was that the government’s projections rest on an unrealistic assumption about productivity growth. Repeat, “unrealistic assumptions”.

They Government assumes that productivity growth will remain the same as it has for the past 30 years which of course is an absolute nonsense. The secretaries said this would need “continued economic reform”, and the Government seemed to have squibbed any of that.

That we are being sold a hoax in the guise of a plan seems to escape us. As one journalist at the Economic Debate rather sarcastically pointed out on Friday. The budget assumes iron ore at $50 dollars a ton where as it now $40 and will probably go lower. This means that the budget is not worth the paper it is written on. A ten-dollar difference can throw the budget out by many millions.

It also means that if indeed the budget is a plan then the plan assumes a number of unrealistic economic hypothesis that make it a bad plan.

There is no certainty that the centrepoint of the plan, tax reduction for big business could come to fruition. If PEFO is correct then it is at best, a bet each way that the money will be there. The same goes for the opposition’s education policy which relies on that revenue.

It’s all just a big con. They are implying that they will make all the reforms necessary and in doing so there will be a phenomenal increase in our productivity. Jobs growth and revenue will suddenly appear and the deficit will be quickly wiped out. Really, the budget was just a pile of improbable suppositions.

As the outgoing governor of the Reserve Bank, Glenn Stevens, said this week:

“The budgetary situation will be OK if nothing else goes wrong.” And made the common sense observation: “You can’t really assume in life that nothing will go wrong over an extended period.”

It of course raises the question, “What would Messrs Fraser and Halton be doing about the state of the economy unencumbered by partisan politics?”

It’s high time both parties treated us with respect. When political parties are evasive and deliberately withhold information vital to the voter making a decision on how he/she might vote, then their democratic rights are corrupted, as indeed is the democracy parties assume to represent.

With five weeks to go both Turnbull and Shorten need to give us detail. In Turnbull’s case it is an explanation of if in the future the money isn’t available to give the top end of town the tax breaks for big business what then is plan b. Shorten faces the same question only the reference is education.

And I might add. Please cut the bullshit.

My thought for the day.

“Do you shape the truth for the sake of good impression? On the other hand, do you tell the truth even if it may tear down the view people may have of you? Alternatively, do you simply use the contrivance of omission and create another lie .I can only conclude that there is always pain in truth but there is no harm in it”.

 

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11 comments

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  1. Ruth L

    Sadly the ‘spin’ from all sides of politics continues to fool us all.
    Thanks John for your contribution to a ‘spinfree’ analysis.

  2. Terry2

    Former Australian diplomat and member of the country’s Refugee Review Tribunal says the $55 million Australia has paid for refugees to be transferred from Nauru to Cambodia has been a gross waste of money. The last member of the first group of refugees – a total of five people – transferred to the country has now left, less than a year after arriving. Bruce Haigh says the affair is a stain on Australia’s character.

    Bruce Haigh is a straight shooter, a no nonsense man and when he speaks out, as he has on this farce, we had better listen because the politicians won’t tell you – P. Dutton is nowhere to be seen – and certainly Newscorp won’t pick up on it because it’s not a Labor policy failure.

    Just in case you’re not up to date on this, we increased our foreign aid to Cambodia by $40 million – everywhere else we’re reducing it – then we gave Cambodia $15.5 million to assist in the re-settlement of the refugees transferred from Nauru : the same five people who have since left Cambodia.

    When you add to these figures the one billion plus we are spending each year confining around 2500 people on Nauru & Manus the magnitude of this massive policy failure starts to become apparent not to mention the cost in human lives as those who have given up hope commit suicide by self immolation.

    Just by contrast, do you remember how the coalition, then in opposition, together with Newscorp whipped up hysteria about the ‘pink batts’ fiasco as they called it ; a relatively benign policy of subsidised home insulation during the global financial crisis which, as a result of poor OH&S practices by a few employers contributed to four workplace fatalities. We never heard the end of it with several enquiries and a Royal Commission. But on the Cambodia /Nauru/Manus debacle we hear nothing.

    I wonder if we will hear any questioning on this at tonight’s debate ?

  3. michael lacey

    Striving for surplus is going to be our undoing!

  4. Keith

    The quality of decision making is a factor; we have witnessed how with the Abbott “government” decisions have been made from an extreme Neo Liberal perspective. Since Turnbull has become the leader of the big end of town there has not been an improvement. The NBN is a good example of poor decision making, creating huge cost blow outs.

    Dr Church, has been retrenched from CSIRO at a time when his expertise is needed most. Dr Church has an International profile; yet, Marshall, the CEO of CSIRO has no such profile. The wrong person has been retrenched.

    Marshall suggests that we know everything needed about climate change; strange commentary from somebody heading a scientific Agency.

    An article in New Scientist suggests otherwise, as do other recently published papers in Journals.

    https://www.newscientist.com/article/mg23030754-400-exclusive-effect-of-co-on-warming-is-worse-than-we-thought/?utm_source=NSNS

    It is necessary to take a free subscription to access the article.

    The first paragraphs state:

    “WE MAY be in for more global warming than we hoped, New Scientist can reveal.

    Over the past few years, a number of studies have concluded that a given level of carbon dioxide in the atmosphere produces less warming than previously thought. This rare good news on climate made headlines around the world.

    But these studies were carried out towards the end of a period of little warming. Do the results still stand given the record warming in 2014, 2015 and 2016? To find out, New Scientist asked those behind the studies what would happen if the latest global temperature data was plugged into their models.”

    The video clip in relation to increase in temperature is plain scary:

    Forcing within the atmosphere supports the prior references:

    http://www.esrl.noaa.gov/gmd/aggi/aggi.html

    We cannot afford another 3 years of the LNP.

  5. Steve Laing - makeourvoiceheard.com

    I too despair at how the MSM seem happy to go along with this pretence. The point of a plan is so you can measure against it, and if you start to go off plan, take remedial action. Well we know this government will never admit error, so like they’ve done with the CSIRO scientists monitoring temperature change, or the ABC Fact Check department, it’s better to suppress the facts so you can pretend everything is just fine and dandy under their management.

    And so we happily sail towards oblivion.

  6. Jaquix

    Ive noticed a definite lean towards the Coalition spin, on the ABC this week. Plus the re-emergence of Fact Check after a break. Funny though they were both to “prove” that (a) Turnbull and (b) Josh Freydenberg were “not lying”. Plus they put out a video purporting to be an overview of the week, I timed the time given to each side and it was 5/2 – Malcolm getting 5 seconds to Shortens 2 seconds. (They were all quick snapshots). No wonder the Australian voters are swayed to vote against their own interests, when the supposedly balanced/unbiased ABC is taking this line. However, I also notice that Turnbull is increasingly tagged as “disappointing”, and that Shorten is “surprising” them. I think the long campaign is going to suit Shorten, Turnbull is already looking tired. A classic tortoise and hare race !

  7. Salstarat

    My big question is WHERE THE HELL is the malevolent liars in the LNP getting $52 BILLION hard earned Australian tax dollars to fund the scandalous, profligate waste on only 12 useless, obsolete SUBMARINES? That is nearly $2,200 for every man, woman and child in Australia! This $52,000,000,000 is the BIG ELEPHANT IN THE ROOM and the LNP have not made ONE MENTION of where the money is coming from yet they have the bald faced AUDACITY to accuse the LNP of having a black hole! What a sick and twisted joke!

    $52 BILLION is one HELL of a lot of money and when you add to that the estimated $100 BILLION it will cost to maintain them, that is a WHOPPING $152,000,000,000 BILLION for 12 paltry submarines that would be completely impotent in the event of a nuclear war which is remotely fought at the press of a button! $52 BILLION is enough money to feed, clothe and educate GENERATIONS of our children and grandchildren with millions left over to assist the poor and needy of Australia and desperate third world nations! My God, the LNP never stop wasting and pissing money up against a wall on war, weapons of war, ramped up terror campaigns and the relative advertising to promote it! Disgusting, war mongering and morally bankrupt idiots that use division, terror, xenophobic racism and fear for ruthless political gain. On top of that, they have expended more than $240 MILLION on three politically expedient Royal Commissions that have amounted to absolutely NOTHING but the reprehensible abuse of our court system in their failed attempts to discredit the Labor Party!

    What a pack of transparently plotting, scheming rodents the psychopaths in the LNP – they will lie and lie and lie, break promise after promise, say and do ANYTHING to maintain their tenuous grip on power. They demand ordinary working- and middle-class Australians to “pull our belts in” but are throwing OUR money away, like drunken sailors, on outrageous, transparently corrupt schemes to provide themselves with dubious political advantage! The LNP never stock attacking, vilifying and marginalising the poor and most vulnerable members of our community whilst allowing the top 1% of corporate, multinational predators a tax-free existence whilst they funnel millions away in tax-free off-shore havens. The Lying Nazi Party treat ordinary Australians with open, sneering, condescending contempt whilst they lay at the feet of the self serving mining elite, like Rinehart and Twiggy Forrest, who are mining this country into oblivion, devastating our environment and exporting profits – and jobs – overseas. Is there anyone out there who is really dumb enough to vote for these catastrophic, environmental vandals and pathological liars again? Probably, because if there is one thing that is as sure as sunrise, is that LNP sycophants are as dumb as dirt!

  8. kerri

    Terry2 You raise an interesting point with pink batts vs offshore detention!
    There were 4 deaths under the pink batts scheme. (Less than there were in the same industry under Howard)
    There have also been 4 deaths in offshore detention under this government!
    Where is the Royal Commission into deaths in offshore detention???
    Oh! That’s right! They were brown people!

  9. SGB

    Apparently 49% of the electorate will vote LNP on a two party preferred vote

  10. Florence nee Fedup

    So when Burke was challenged this morning that he knew how bad things were from the budget, that there was nothing different in PEFO. Therefore was lying when they said they dropped School Kid Bonus for that reason.

    We can ignore what Shorten has said all along. That all policies formed over last two years were under constant review, If they couldn’t fund them, wouldn’t be released. Also I believe they are asking budget honesty to review regularly, Process one would think would be praised.

    Still talking about black holes with policies still to be released.

    I see government punching at shadows that they created out of their assumptions of what Labor will do, not even done yet.

  11. townsvilleblog

    Bowen won the debate with Hillsong, Bowen knew what he was saying and ole’ Hillsong seemed to be making it up as he went along.

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