CAAANBRA: Missed the Target

Shadow Treasurer Joe Hockey addressed the National Press Club today in what was effectively the woofteenth attempt by the opposition to deliver a Budget Reply Speech. Just an hour or two earlier Independent Rob Oakeshott announced via Twitter than next week he will be mounting a Confidence Motion to reaffirm Parliament’s faith in the departments of Treasury and Finance.

The proposed Confidence Motion is in response to the projectile vomit-like stream of doubt that Joe Hockey and his colleague Matthias Cormann have aimed at the Department of Treasury over the budget figures.


The one thing that irked me most about Mr Hockey’s and Senator Cormann’s suggestions that the figures quoted in the budget are untrustworthy is that they are trying to launch another political attack at the government. It's an election year; if the Opposition wasn't trying to undermine the Government, you'd need to check for a pulse. In any case, they missed their huge, floodlit Government-shaped target by about t--h--i--s much, and hit the public service instead.

Treasurer Wayne Swan has stepped in this morning and labelled their attacks as ‘profound insults’ to the public service. Understatement, much?

What evidence does the Opposition have that there is anything suspicious in the Budget figures? I had hoped that Mr Hockey’s speech at the NPC today would answer that question. Instead, Mr Hockey offered five reasons why we can’t believe the budget that Mr Swan handed down last week. (Five is the Coalition’s favourite number at the moment; their campaign features a five pillar plan to save us all from more ALP thingamyjiggery. It's Newman's CanDo Plan for Queensland all over again.)

Here’s Mr Hockey’s Big Five:

1. The Government broke their promise to deliver a surplus (which he suggested later had lead to the “fiscal emergency” we’re now facing, here in Oz where we have the healthiest economy in the world.)

2. An ALP Government would have to borrow more money, which would undermine the budget forecast

3. If they borrow more money, they’d need to increase the debt ceiling

4. (And this is the clanger) the Budget assumptions are "courageous"

5. The ALP Government spends too much money

It makes you wonder if Mr Hockey has ever had to construct a budget for anything in his life. Cattle stations notwithstanding, he seems to lack even a basic understanding of forecasting, so here's the simplest possible explanation: forecasting is taking the facts that you have right now, and using experience and expertise and wisdom (including everything from Grandma Queenie’s common sense to sophisticated economic modelling and even some wishful guestimation) to try to predict what is going to happen in the future. As for economic forecasting, it’s hardly a science. In fact, getting two economists to agree on what to have for lunch is impossible. But that’s about future, and the Liberal’s beef is with the present. Or not. Confusing.
Let's revisit Mr Hockey’s number 4. The Shadow Treasurer and the Shadow Assistant Treasurer (whose portfolio also includes Financial Services and Superannuation) are both publicly questioning the accuracy of assumptions provided to the Government by the Departments of Treasury and Finance.

It’s important to note that neither of these shadow ministers have any formal education in economics; both have qualifications in Law, as do Wayne Swan and Penny Wong. That has always struck me as a little odd…but like all of us, Ministers and their Shadows rely on subject matter experts – usually public servants - for advice and information.

In the case of the budgetary dollars and sense, the current Secretary of the Department of the Treasury is Dr Martin Parkinson, an economist with a long history in and around politics, and as a senior public servant. He’s copped the brunt of the attacks from the Opposition. In today’s Australian, Senator Cormann continued the tirade:

Senator Cormann said Dr Parkinson provided the government with forecasts behind closed doors and he would "of course" defend them publicly. But he said the budget was the government's document, not the Treasury's.

“I don't believe for one minute that the Treasury, left to its own devices, would have come up with some of the unbelievable assumptions that Wayne Swan and Penny Wong have based their budget figures on,” he told ABC radio.

Yes, the Opposition is suggesting that the Government has somehow coerced public servants within the Departments of Treasury and Finance to fudge figures that would make the Budget look better than it really is? That is one helluva serious allegation, one helluvan insult and quite probably, grounds for investigation. It’s also close to unbelievable.

Senator Cormann wasn’t finished:

“His job as secretary of Treasury until the election period is to serve the government of the day.”

That much, at least, is true, although I suspect his words were thick with unspoken agenda.
Section 1.2 of the Australian Public Service Values and Code of Conduct document is a pretty dry read, but there is no ambiguity around the relationship between public service and the Government. This document lists the Australian Public Service (APS) Values as follows:

•The APS is apolitical, performing its functions in an impartial and professional manner.

•The APS is openly accountable for its actions, within the framework of ministerial responsibility to the government, the Parliament and the Australian public.

•The APS is responsive to the government in providing frank, honest, comprehensive, accurate and timely advice and in implementing the government's policies and programs.

The document continues:

The role of the APS is to serve the Government of the day: to provide the same high standard of policy advice, implementation and professional support, irrespective of which political party is in power. This is at the core of the professionalism of the APS.

If Mr Hockey or Mr Cormann have legitimate concerns around the veracity of figures included within the budget, and if they believe that the wobbly figures were provided by a member of the APS, have the suspected breaches been reported to the appropriate authorities for investigation? (Note to Mr Hockey: Sky News and The Australian are not appropriate authorities.)
If they don’t have anything more concrete than wishful thinking and a desire to hurt the Government’s chances of reelection, they should sit down and shut up now…and in an astonishing turn, even Tony Abbott agrees. He’s visibly placing his trust in the Treasury, and restricting his budget related hostility to attacks on Wayne Swan and Penny Wong.

Where does that leave Joe Hockey and Matthias Cormann?

With no tangible proof of wrongdoing by the Government or the Public Service, no support on this issue from their Leader, and Mr Oakeshott’s decision to lead a Confidence motion in the Departments of Treasury and Finance, their campaign to discredit the numbers is looking pretty fragile.

Budget BonBons

2UE Radio announcer and host of Sky News' PM Live is Paul Murray tweeted a great question today, asking when 'welfare' became 'entitlements'. There are probably as many answers as there are Aussies receiving 'entitlements'.


Paul Murray's question suggests that welfare and entitlements are the same thing. They are payments that come from the same source, yet when I say those words, I see very different images.


Welfare is basic financial assistance for those going through a rough patch. Welfare is minimal. Welfare is housing commission, paycheque to paycheque desperation. It's bread and butter and a kilo of cheap mince meat.


Entitlements are a right, a bonus that someone else is obligated to pay you because you are legally entitled to it. The picture, at least in my head, is of McMansions in outer suburban estates, two car families, professionals. It's the second bottle of wine, or the hand-made pistachio macarons from That Little Shop (you know the one, darling).


Welfare is necessary; entitlements - or the ironically titled Middle Class Welfare - are not.


My response, via Twitter, to Paul Murray's question was that the change occurred during the Howard years, when each budget included some kind of allowance or bonus or tax cut to help Howard's 'Aussie Battlers' - families in the mortgage belt...except that we got greedy. 


It was a time when couples weren't satisfied with a three bedroom, one bathroom triple fronted brick veneer in the suburbs where they grew up. They needed a four bedroom plus study, two bathroom plus powder-room, Tuscan style plus alfresco entertaining, in ground pool plus spa. Plus...plus...plus...


And of course, we enabled and encouraged this; it supported the construction industry, even while it strained the budgets of ambitious families who wanted more...more...more.

Year upon year, sweetener upon sweetener, governments have built an expectation in the middle classes that come budget time, early May, we find out what new goodies are coming our way. Aimed squarely at the aspirational middle class, these budget bonbons became entitlements. 


Surely, those entitlements to assist you to keep up with the Jonses are not welfare; they were never welfare. These were the prosperous years before the GFC, and the Government coffers were bulging. As these handouts were announced, there was no fine print that said 'Payments Available Only While The Good Times Roll," and thus they became entitlements; Payments made by the Government to the middle classes who should not need them. 


God help you if you tried to take these entitlements away! The morning after Wayne Swan delivered his first budget in 2008, my boss was in tears. The Child Care Benefit was being changed: instead of being means-tested and reducing to a minimum rate, as it had under Howard, the sliding scale would now continue all the way to zero. The tears were because on a combined salary exceeding $150,000, she and her husband wouldn't qualify for any Child Care Benefit, and therefore would never be able to afford to have children.


I fought the urge to slap her. They'd been able to afford their $50,000 wedding and honeymoon, and before that, a boob job and an enormous diamond.


Seriously, if a couple on $150,000 can't afford to have a child without government assistance, they need to look at their lifestyle and make some changes. These people were not poor, not struggling, not battling, yet felt entitled enough to cry on my shoulder. The new ALP Government was taking away their only chance to have a baby! Bastards!


I was single then, earning about a third of their combined income, but they expected that my taxes should subsidise their breeding programme. That is the picture of entitlement.


Contrast that with people on genuine welfare: Newstart allowance, aged and disability pensions, Carer's Allowance, DVA Allowances...Are you seeing a different picture?


Today's pre-Budget sweeteners are a little chewier than most, but I wonder why Wayne Swan needs to offer them at all. Isn't the fact that he needs to roll out the dessert cart yet again just a function of our overdeveloped sense of entitlement?


In his drive to produce the Holy Grail of Budgets, a Chocolate Coated Surplus, couldn't he have been honest with us and broken the cycle? 


'No sweeteners this year; you get a surplus instead'?

Fact and Fiction: My Five Cents Worth

It’s not that I can’t balance a cheque book, it’s that I can’t be bothered balancing a cheque book. I have a pretty accurate idea of where I’m at financially, day to day, month to month, and when I need to double check my mental arithmetic, I can handle online banking with the best of them.

Having said that, I don’t think I’d like to be trying to manage the debt that is, if you believe the tabloids, forcing Queensland to stagger. In just eight years, Queensland’s public debt – that owned by the state – has more than quadrupled, and is expected to hit about $90billion by the time our new LNP State Treasurer Tim Nicholls hands down his first budget in a couple of months’ time.


With a $90billion dollar debit to juggle, I’m really pleased to see that Premier Campbell Newman and Ros Bates, his brand new Minister for Science, IT, Innovation and Arts have decided to save the $240,000 earmarked for the Premier’s Literary Awards by cancelling the grant. There’s no doubt that Queensland’s writers are feeling good about being able to discharge 0.00027% of the state’s debt.

The scrapping of the Literary Awards has sparked a vibrant debate around Queensland, taking us right to the heart of philosophical issues like the role of the arts in society versus the responsibility of government. Who knew that the readers of the Courier Mail would be ready to delve into discussions about such lofty topics. (There's a selection at the end of this blog; please add your own comments below.)

The thing about public debt is that it makes little sense to most people. How many of us can relate to numbers in the millions or billions. Let’s work with the numbers we already have and say that Queensland owes $90 billion dollars. If we divide that by today’s population, estimated to be 4,638,827, it comes out at $19,401.46 per Queenslander.
 So, we each owe the equivalent of a fairly modest new car.



So that’s a number that means something, but it’s still not relevant because we’re not going to be billed $19,401.46 each. The state has many sources of income, and some of those will ultimately come back to you and me in the form of increased taxes and tolls.

So as consumers, residents of Queensland, we really don’t know what all these numbers mean to our standards of living, or what that standard of living is going to cost us. We do know that the decision to end the Premier’s Literary Awards is saving each one of us in Queensland about five cents. Each.

I hope my five cents is being spent on something worthwhile.