Cooking the books. John Menadue

Nov 14, 2013

Tony Abbott and Joe Hockey have decided that there wasn’t really a budget emergency or a debt crisis that they have warned us about for many years. Perhaps they may have also privately conceded, as they should, that the Australian economy was one of the best performing and best managed economies in the world during the years of the Rudd and Gillard Governments particularly through the Global Financial Crisis.

Tony Abbott and Joe Hockey however have now decided on another tack – cooking the books by announcing budget changes in the current year that hopefully can be attributed to the Labor Government. They hope that in the confusion the electorate will forget who is responsible for what.  In this attempt to change the subject Joe Hockey is now suggesting that this year’s final outcome for the budget will be a deficit of $45 billion to $50 billion compared with the $30 billion announced by the Labor Government in August this year.

Let’s look at some of this sleight of hand that so far the government is taking to deliberately blow out the budget deficit that can be blamed on the previous governments.

  • An extra $8.8 billion is to be provided to the Reserve Bank to top up its reserve fund. The Reserve Bank never asked for it, but who knows, they might need it! It is better to be safe, particularly if you can blame the previous government. On bank reserves, the four big banks might have done more to top up their reserve funds for the future given their large profits, generous dividends and high executive salaries.
  • The Government will not proceed with Labor’s change in the fringe benefits tax treatment of executive cars at a cost of $1.8 billion over four years.
  •  Joe Hockey will ditch the tax on superannuants who earn over $100,000 a year from their super funds, at a cost of $313 million over four years.
  • He will dump the cap on self-education expenses at a cost of $266 million over four years.
  • The government will review loans that permitted global companies shifting their profits from Australia to lower tax-paying countries abroad.

These changes are just the beginning. There will be more of this in the future – the object being to worsen the budget deficit this year so that it can be attributed to the previous government.

This is the same well-tried policy of almost all new CEOs – fix the books to attribute as much opprobrium as possible to your predecessor.

Joe Hockey is in for a lot more long nights with his desk lamp and eye shades, to get the best political results he can from this year’s budget.

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