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Answer the question please, Mr Hockey

It seems that if there's one thing Joe Hockey doesn't want to talk about any more, it's the rubbery MYEFO figures he trotted out in full Doomsday mode in December.

Asked about them in Federal Parliament yesterday, the best he could do was have a lame slap at one of his constituents – me. And he didn't even get that right.

In question time, shadow treasurer Chris Bowen made loose with his adjectives to ask:

"I refer the Treasurer to recent comments by respected market journalist Michael Pascoe suggesting that:

"PASCOE: The evidence keeps mounting that his [the Treasurer's] Mid-Year Economic and Fiscal Outlook forecasts were rubbery.

"Does the Treasurer stand by the economic assumptions that contributed to a $68 billion deterioration in the budget since the election?," Mr Bowen asked.


Carefully avoiding the actual issue, the Australian Treasurer replied:

"Yes, Michael Pascoe is so respected that he wrote a few days, a few days before I put $8.8 billion into the Reserve Bank he wrote that I was going to rip money out of the Reserve Bank. That's how good Michael Pascoe is. That's how good Michael Pascoe is. So if you're taking economics lessons from Michael Pascoe, I'd suggest you go back to Swanny."

Well, if that's my worst moment in journalism, I might be respected after all. The actual story back in October speculated on whether he would be tempted to raid the RBA coffers, as Wayne Swan had done. Read it for yourself here, but I think I managed to pull up short of saying he would do it.

Of course, as it turns out, Hockey has played a much more sophisticated game to make the last "Labor" budget look as bad as possible and "his" first and subsequent budgets look as good as possible. He will indeed rip plenty of money out of the RBA, but not this financial year.

As previously and widely reported, such as here, Trader Joe is borrowing more than $8 billion to give to the RBA this financial year, so that he can Hoover up all its profits as dividends thereafter. With a little bit of luck at the casino that is the foreign exchange market, it should pay off handsomely – and it needs to, as the leveraged bet is costing the rest of us $300 million or so in unnecessary interest.

Unfortunately, it looks like Hockey missed the sweet spot, the chance to borrow the dosh when Commonwealth bond yields were at their lowest and while the Aussie dollar was considerably higher. Politically though, the gamble will still pay off – as long as he can fool enough people about his fiddling with the deficit.

As for the MYEFO numbers, they must indeed be seen to be rubbish if he's not game to even mention them. That became plain in February with the RBA's statement on monetary policy and just about every bit of economic news since then has confirmed it.

Oh well, it will all come out in the May budget's wash – or so we should hope. In the meantime: "Look over there! A puppy!"

Michael Pascoe is a BusinessDay contributing editor


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