Newmania: Gonski

We have to talk about Gonski. We have to talk about what is happening to prepare the next generation for life. We have to talk about priorities.


We have to talk about King Campbell.

For reasons that I can’t begin to understand, King Campbell and his band of confused, overwhelmed ministers are planning to refuse $3.8 billion dollars from the federal government because Queensland can’t afford the $1.3 billion dollar state contribution that would be required under the Gonski reform plan.

Newmania’s Chancellor of the Money Bags, Tim Nicholls says that he’s already committed $835 million dollars of extra funding to education. By my calculations, that leaves just $465 million dollars to find. I was educated in New South Wales, so I did that calculation in my head.

In any case, Chancellor Money Bags will tell you that $465 million dollars is a whole lotta money, that would buy 465 hospital beds, almost 6,000 teachers or 9+ primary schools. It’s a trade-off. He says. I did those calculations in my head, too.


Here’s the reality: the Newmanian Government has decided that in a battle between a $5.1billion dollar investment in school education, including $3.8 billion of new federal government money, and $465 million of existing funds, the sane choice is to take the money we already have, rather than the gift we so badly need.

We need to improve education in this state. Last year, Newmanian students lagged behind the national average, and in some areas, behind minimum standards in NAPLAN testing. 

Education-wallah John-Paul thinks that it’s a minor detail and was able to find a lot of excuses for why our kids aren’t performing as well as they should. I’m sure Western Australia would like to know about our decentralised jusirdiction, and both Sydney and Melbourne will be fascinated by our diverse cultural mix.

In fairness, the NAPLAN results for Newmania had improved in many categories; we beat the Northern Territory…possibly because Newmanians don’t subject their children to the NT News each day...but that's for another day.

Again, as always, we must go back to the policy documents the LNP released and campaigned on prior to the last election. Unfortunately, the LNP has removed that document from their website, and basically reworked their entire website for the federal election five months from now. Fair enough too: Newmania has already made its mistake. If nothing else, may it serve as an example to others.

Back to the LNP website, though, and you’ll see, under Policies, a whole bunch of airy-fairy feel-good words that almost everyone of any political persuasion would have trouble ignoring:

In our view, government should achieve:

•A just and humane society, where those who cannot provide for themselves can live in dignity

•The family as the primary institution for fostering the values on which a cohesive society is built

•Equal opportunity for all Queenslanders in a tolerant and diverse society without exploitation

•The encouragement and facilitation of wealth so that all may enjoy the highest possible standards of living, health, education and social justice

•Preserving Australia’s natural beauty and the environment for future generations

•A spirit of patriotism in which all Australians are united in the common service of their country and accept the necessity of defending their nation in times of crisis or adversity

•A secure environment in which Australia is safe from aggression and plays its part in world security in defence of peace

Actually, the second dot point is a problem for me, but the rest of them are appropriately vague, warm and hairy. I’ve highlighted the fourth dot point, as it’s the only one that deals with education.

“The encouragement and facilitation of wealth…” the document says. I’d expect to see King Campbell running up the hill towards Caaanbra’s Parliament House, arms outstretched in fanatical encouragement of the fortune Prime Minister Gillard is offering. Okay, so the sticking point might mean that Chancellor Money Bags needs to do some fancy facilitation with $465 million to capture the prize. It’s worth it, isn’t it? Newmania’s kids are worth it, aren’t they?

Well, no, apparently they’re not.

The entire Education Spend in the last state budget was $10.7 billion. The Federal Government is offering to increase that by $3.8 billion, and we’re quibbling over $465 million. Excluding Gonski funding from the Federal Government, that’s 4.35% of the education budget. (I needed the calculator for that one.)

Put it another way: King Campbell is knocking back the opportunity to increase the state’s funding for education by 35.5% because it might cost him 4.35% of the original education budget.

Logic like this is why Newmania needs Gonski.

(And if you’re still not convinced, listen to him not answer Steve Austin’s questions on 612ABC Brisbane this morning!)

Newmania: Flatly Wrong

This morning, we heard about a new review into Peter Costello's Interim Commission of Audit Report. The review was conducted by Professor Bob Walker  who was commissioned by the Queensland Council of Unions. The findings in the report are exactly what the unions would want to see: that the report is fatally flawed in a number of ways. Professor Walker's credentials seem to be perfect for conducting this sort of review, but please listen here to Steve Austin's interview with Professor Walker on 612ABC Brisbane this morning, or read my transcript below, and make up your own mind.


SA: A Sydney academic has blasted Peter Costello’s Interim Commission of Audit Report into this state’s finances, labelling it as shoddy, and intellectually dishonest. It’s the document the Government of Campbell Newman has used to justify its aggressive cost cutting programme. Professor Bob Walker, together with his wife who’s an economist from the University of Sydney was commissioned by Queensland Council of Unions to audit the Interim Commission of Audit, or review it. His report was released today. I spoke with Professor Walker this morning before coming on air and asked him to give me his own overview of the document first of all.


BW: I think it’s a rather shoddy piece of work, and it’s intellectually dishonest. It fudges the figures in two main respects. First, it refers to what it calls ‘debt of total government’, and I think 100% of readers would think that includes absolutely every government agency, the whole of government. In fact, there’s a definition on an un-numbered page just after the cover which explains that total government for the Costello report excludes what they call the ‘financial corporations sector’ which includes the agencies which hold $28b worth of investments. So when the Costello report talks about debt – or, has a funny definition of debt. It doesn’t set off those investments and the standard way of talking about government finances is to talk about net debt.

Turning now to the second way in which the report fudges the figures, it defines debt as ‘gross debt less investments’, particularly those held for investment purposes for superannuation. Now that leaves reason to think that $28b would’ve been deducted, but instead it’s not.

SA: So they’ve included things like the debt being carried by government owned corporations which have a means or ability to pay things back, and you think it’s unfair to include that.

BW: I think it’s fair to include that, as long as you have the whole picture, the whole of government, and not define ‘total government’ as something less than all government agencies.

SA: Right

BW: And secondly, or thirdly, I suppose, it makes a lot of projections about future levels of debt and capital expenditure and so forth, and doesn’t justify any of this with tables of data. It looks as though they’ve, eh, made little historical projections as past borrowings, including borrowings for agencies like QR National, which have since been sold, and all in all, I mean they’ve admitted that they didn’t undertake any modelling; it looks as though their projections are prepared by a graphic designer drawing a line on a graph.

SA: Given who prepared this, and how it’s being used, that’s a damning statement. You are saying that they are being deliberately or negligently misleading in the Interim Commission of Audit.

BW: I’d say that, and I’d further emphasise that’s surprising; we have standards for something called performance audits in Australia. They’re prepared by a Commonwealth Government agency, which used to report to Mr Costello. And they’ve issued standards for performance auditing; it’s just uncomplied with in this document.

SA: So this document doesn’t meet accepted Commonwealth auditing standards?

BW: Well those standards apply; they’re mandatory for corporations but the document says they provided guidance for other exercises of this type, and it’s strange that standards issued by an agency that used to report to Mr Costello are just totally ignored.

SA: So how can the ordinary Queenslander see this or approach this Interim Audit. It’s being used as the platform or the reason d’etre for significant job losses in Queensland in the Public Service. How should we regard it?

BW: I think you should be outraged, frankly, because it’s a totally political document, prepared without regard, I think, to the facts.



Prof Bob Walker
BCom UNSW MEc PhD FCA



SA: My guest is Professor Bob Walker. He’s from the University of Sydney. He was commissioned by the Queensland Council of Unions to audit the Interim Commission of Audit prepared by Peter Costello, former conservative Liberal Treasurer, professor Sandra Harding, from the James Cook University, and Doug McTaggart, formerly head of the Queensland Treasury Corporation. My name’s Steve Austin.
Let me go through some key points then if I can, please Professor Walker? First of all, Tim Nicholls, the Treasurer, will be releasing his budget on Tuesday of next week, said the QTC, the Queensland Treasury Corporation advised him that the state’s level of debt was unsustainable and must be urgently addressed. Do you disagree?

BW: I think the debt is totally manageable. In fact, if you look at the net debt figures, Queensland’s got a net debt…it’s the standard measure used, of around $17b. New South Wales has got almost double that. So I think there’s a lot of scaremongering going on with this report.

SA: Well, I’ll keep going…the Treasurer also said to Queenslanders that because of what he described as “Labor’s Debt Binge”, that the debt was expected to blow out to $85b by 2014-2015, and this is putting pressure on the state’s credit rating. Do you disagree with that?

BW: Well, the credit ratings agencies sometimes don’t get it right, and the ways in which Queensland prepares its accounts is sometimes a bit confusing. But the projections of debt in the Costello report aren’t justified with details of capital commitments. As I said, they’re just figures seemed drawn out of the air.

SA: Now, I’ll go on. The statement issued by the Treasurer in June of this year said that Queensland’s current net financial liabilities compared to operating revenue was forecast to reach 123% by June next year. Do you think this is a misleading approach?

BW: I think it would be better to look at the statistics published by the Australian Bureau of Statistics which standardises all figures from around Australia. Also, look at the figures in the audited financial statements which the Costello Report does not refer to except in passing. It’s quite astonishing that claims have been made, for example, that Queensland had to borrow to support the budget when the audited statements of cash flows shows that Queensland Government has reported surpluses from its operating activities. Cash surpluses.

SA: That to me is quite shocking because we’ve had this debate here in Brisbane some time ago, that the Government says they are borrowing to pay wages, and they have been very definite on that. You’re telling me that that’s not the case.

BW: That is flatly wrong, and all you need to do is look at the audited statements of cash flows, which have been reviewed by the Queensland Auditor General to see that the operating activities of Queensland have produced cash surpluses. Money has been borrowed, but it’s been used to invest in infrastructure.

SA: So we were borrowing money, but it was used to invest in infrastructure, not being used – and you can tell this from the audit you’ve done, you can tell this absolutely, put your professional reputation on the line - that it was not being borrowed to pay public servants’ wages in Queensland.

BW: I rely on the audited financial statements which have been reviewed by the auditor general which showed that Queensland produced surpluses from operations. It also invested heavily in infrastructure. These statements show the results of operating, borrowing, er, financing and investing activities and they clearly show that the bulk of borrowings went into infrastructure. In fact, looking over a ten year period, about half of the investment in infrastructure was funded by cash surpluses from operations.

SA: Half? By cash surpluses?

BW: Roughly. I don’t have the figures with me, but roughly, yeah.

SA: You’ve made the point and referred repeatedly to Peter Costello. He’s not the only person on the commission of audit. Doug McTaggart, respected financial mind, generally regarded on the conservative side of the ledger, former head of the Queensland Treasury Corporation: He has signed the Interim Commission of Audit, as has Professor Sandra Harding of James Cook University in North Queensland, generally regarded as being sort-of centre-left if you like, ideologically. She has also signed off on these figures. Now they are not obviously political figures, but why would they be a party to something which you’re telling me is so obviously misleading?

BW: I don’t think…whatever their skills in other areas, I don’t think they have skills in financial analysis. In relation to their past academic roles, I would say that if I received this report in my role, as I often do, refereeing articles submitted to international research journals, I would treat it as not worthy of publication. Revise and resubmit.

SA: Can I get you to repeat that? Not worthy of publication?

BW: If I received it in that context, because so much money has been invested in it, you’re reluctant to trash it totally, but I’d invite the authors to revise and resubmit.

SA: My guest is Professor Bob Walker from the University of Sydney, commissioned by the Queensland Council of Unions to audit the Interim Commission of Audit that was prepared for the Queensland State Government.

BW: Can I add that this report is solely my own work. It’s prepared with my wife, Dr Betty Con Walker, who’s an economist, and formerly worked in New South Wales Treasury and is very familiar with budget papers.

SA: All right, thank you for that. So then, leading into the state budget which is an extraordinarily late state budget next Tuesday, how should Queensland taxpayers approach what they hear from the mouth of the Treasurer Tim Nicholls?

BW: I think with a great deal of…a grain of salt. We’ve already seen extravagant statements coming from Government Ministers, extrapolating from the Costello report that Queenslanders faced $100b debt now. That is flatly wrong, and I notice that a couple of parliamentarians have had to clarify their statements in parliament. There’s been gross exaggeration on the basis of this report. That’s a risk. We have a section in our report talking about the dangers of Commission of Audit reports. In the hands of inexperienced or not financially numerate politicians, some of the extravagant language in the report can be exaggerated and wrongly interpreted.

SA: The Treasurer did say in June of this year that feedback from financial markets indicated that the market considers the Queensland state fiscal position to be “unsustainable” and looking for the state government to deliver a credible strategy to address our state level of debt. Can I ask you to respond to that, that the financial markets from whom we, the state government, borrows money, say that the debt here in unsustainable, and they need to develop a strategy to pay down the debt.

BW: Well, I’m not sure. They’re probably relying on some of these credit rating agencies, whose performance leading up for the Global Financial Crisis is quite a lot, but in my own experience, the staff at credit ratings agencies aren’t quite on top of the figures. Some years ago I pointed out that when the state government in New South Wales was claiming to have a budget surplus; it was in fact only reporting about the results for the consolidated fund, not for what we now call the General Government Sector, and when that report was published, they put New South Wales on Credit Watch. (Laughs) So I’m fairly sceptical about some of the interpretations by ratings agencies.

SA: I really appreciate your time. Professor Bob Walker, thank you.

E&OE

Newmania: It's Tough. It's Really Tough

Unlike the rest of us, King Campbell and the LNP do not acknowledged that there is a developing crisis of confidence as regards the King’s leadership, the course in which he’s steering his state, and the brutal speed at which he’s taking us there. Cuts to programmes, job losses in the public service, legislative changes based on traditional values, unfathomable financial support (and jobs) for mates, criticism from within and a hostile relationship with the federal government have some Newmanians concerned.


Of course, King Campbell has no reason to be alarmed; he told Steve Austin on 612ABC Brisbane this morning that he spent seven hours at the Ekka yesterday, and only heard one negative comment. That’s fair enough; the Ekka on Peoples’ Day is a crowded, sticky, smelly cacophony of terrified animals, sugared up kids, exasperated parents and exhausted tourists. I’m surprised he could hear anything at all. Listen to the interview here, or see the blog post below this one for the fullish transcript. 

King Campbell and his trusty deputy Eff Seeney have each fronted up to 612ABC this week to spend some time answering questions. While there is a commitment to do this regularly, both in one week is indicative of either poor communication between the Leader’s and Deputy Leader’s Communications teams, or it’s a co-ordinated effort. In any case, this morning's performance won King Campbell no new fans, no gold medals and ticker tape parades. In fact, if this was his audition to become a member of the human race, he failed.

Here are the highlights from this morning’s interview.

 It’s all about the money. No really, it’s all about the money. He can recite debt and deficit figures the way the rest of us remember the lyrics to Bohemian Rhapsody. Everything that the Newman Government has done, or is planning to do, is about getting the state out of the financial quagmire. People come second.

 King Campbell shows no signs of getting past the Labor’s-To-Blame Game. That’s a no-brainer. It was “20 years of Labor” – but particularly the last five years - that created the financial cataclysm that has befallen us, therefore, everything that the Newman Government is doing can be traced back to the financially irresponsible Anna Bligh.

 People who aren’t happy with King Campbell don’t speak to him, write to him, email him or phone him. He has no knowledge of such people. Almost everyone he’s encountered in the past couple of months has congratulated him or thanked him for making the tough decisions.

 The decisions are tough. They’re very hard. They’re absolutely necessary, but very tough. They’re not easy, not taken lightly, and they're tough.

 The only people who are unhappy about the tough decisions are public servants in the firing line, and union people with vested interests. Everyone else is happy because these are tough times, and someone is taking responsibility for the tough decisions.

 It takes 3-4 weeks for King Campbell’s minions to respond to a letter, email or phone call. Presumably, most of those would be thank you cards and letters of congratulations.

 It would cost every man, woman and child in Newmania a thousand bucks in extra taxes this year to save the jobs of 20,000 public servants.

 The Labor Party remnants requested a briefing from the Independent Audit Committee and then something something didn’t happen something something. Doesn’t matter; we'd lost interest by then. It’s all Labor's fault anyway.



 King Campbell is gleeful.

 No member of the Government has had his or her salary cut or allowances curbed, but that’s not King Campbell’s fault. That’s controlled by the Committee of the Legislative Assembly, which includes a token member of the Opposition. Therefore it’s the Opposition’s fault.

 The cuts aren’t hurting vulnerable Newmanians because King Campbell said they’re not. Okay then.

 King Campbell does not do Weasel Words of Silver Tonguing. (Be grateful, Newmanians, be very grateful.)

 Caravan Parks are tricky for the Government, who seem to think that the Housing Pixie Dr Flegg can house 30,000 Newmanians in good quality safe, clean public housing, using the proceeds of the sale of three unprofitable caravan parks.

 If anyone becomes disadvantaged because of the Caravan Park sell-off, they’ll be looked after in the private sector train wreck partnership that Labor left behind. I may have got that wrong.

 King Campbell isn’t picking on the disadvantaged. He’s also picking on the over-advantaged, just not as much. They’ve lost their access to Corporate Boxes at the Gabba.

 According to King Campbell logic, writers are not disadvantaged.

 Killing the School Band Fanfare programme doesn’t count as a cut anymore because the Private Sector came to the rescue and reinstated the competition.

 All cuts are because of the need to get the state back on track.

 King Campbell doesn’t agree with Noel from Yerongpilly. He recited more numbers to prove it. Tough decisions, hard going. Big numbers.

 Labor had a party and now King Campbell has a hangover. (The rest of us have a Panadeine, a bacon and egg roll and a gallon of coke. Wouldn't that be cheaper?)

 Despite the calamitous state of Newmania’s economic hangover, there’s plenty of positive signs for the state’s economy. Newmania is in the midst of Labor-made fiscal disaster, but the future’s so bright, I gotta wear shades.

 It’s tough. It’s really hard, it’s unpalatable, it’s gutsy.

 It’s all Labor’s fault, we’re broke, and it’s bloody Anna Bligh’s fault and good riddance and that’s the truth.


Actually, it’s a world-class case of hearing only what you want to hear, avoiding any direct answers, and sticking to the talking points. All that was missing was credibility, sincerity and compassion.