Date: May 12 2012
Budget night offered me two anecdotes and a moral, so let's begin with the yarns.
The first concerns the surplus. It only took a quick glance to understand what the budget's story-line was meant to be. This year a sea of red; $44.4 billion worth. Next year; a surplus. Only $1.5 billion perhaps, but in the black nonetheless. A simple narrative, easily understood. And Wayne Swan also managed to find money to redirect to worthy causes. Another $7 billion for disability, schoolkids, boosted family tax benefits, etc, etc. Add those together and it appeared as if the turnaround's a massive $52.9 billion. Great! So where are the cuts?
Well, yes, there is a $5.5 billion contribution from Defence and another $4.8 from dropping the company tax cut. But these, along with other savings measures, only added up to $27.8 billion. Where had that other $25.1 billion come from? Was it all flood support? I turned to the statements to find out.
Now, the government's made a big song and dance about its new disability scheme, so imagine my horror when I turned to Table C1 of Statement 6 (p6-60) and saw that Comcare's budget (dealing with injured public servants) had been suddenly slashed from $868 million this year to just $447 the next. Sniffing a prize for investigative journalism, I approached a Treasury official.
''Don't worry'', he said, ''it's not an actual cut.'' I must have appeared sceptical; because that's the way it appeared in black and white. ''Look, I can find out the details for you if you want,'' I was told, ''but I'm sure it's simply an actuarial measure. It's a catch-up.'' And, after investigation, that's exactly what it appeared to be. This was a surprise. Treasury normally knows so much about everything it seemed funny that they'd previously missed nearly half-a-billion worth of spending. ''So Comcare won't lose $421 million?'' I asked. ''Oh no,'' laughed my helpful official. ''But why is there less money in this budget?'' ''Well, it's like this,'' he replied, and began explaining why. I'm afraid I got so lost in the detail of future projections, extra costs and accrued liabilities that I can't really tell you why the figure is nonsense, but it was. I became lost in existential doubt - was this the way a surplus was achieved?
That's when I bumped into the Australian Strategic Policy Institute's Dr Mark Thomson. With a background as a theoretical physicist, he understands numbers. But unfortunately, instead of giving me certainty, he simply complicated issues further.
I'd been upbeat when I saw him. ''We've got a surplus,'' I insisted. His response was dubious. ''Really? Do you trust the bottom line projections?'' he asked. Fortunately his question was rhetorical, because by now I doubted the whole thing. He continued: ''This time last year we were promised a deficit of $22.6 billion. By November it had become $37.1 billion. This afternoon I enjoyed crunching a few figures'' - isn't it amazing what some people do for fun - ''and I got some interesting results.''
Now of course you may not find these details ''interesting'', and I suspect it requires a special type of person to make that particular causal link. But Thomson's point was that although you might think you know with a fair degree of certainty where you are today, as the future shifts into the weeks and months ahead, a certain fuzziness creeps into projections. This has the effect of rendering precision meaningless. And that's just what Thomson found. Since 1996, the average magnitude variation of the actual cash balance has been a massive 2.5 per cent, with some years worse than others (such as the year of the global financial crisis, 2007-08, where the deviation was more than 16 per cent). Applying this formula for indicative uncertainty to this budget means the result could lie anywhere within the range of an $11 billion surplus to an $8 billion deficit. In fact, that's the way the UK Treasury now charts its projections - like a fan. The known point is a dot that then spreads out to encompass a range of possibilities, one of which will be correct. Our Treasury, on the other hand, prefers to be precisely wrong.
So what's the moral? Why, read the small print, of course. Just take the injection of $1 billion to ''kick-start'' the National Disability Insurance Scheme. Terrific, we all think. But it appears that money's spread over four years and the first dollop (of $84 million) won't even begin to flow until mid-way through next year. That's a long time away. And even when it does, most of it won't actually be targeted at providing care and support for those with disabilities.
In fact only about a third will assist them. But there will be money for administrators. For example, $59 million for ''assessments of people with disabilities to determine their eligibility''; $53 million for a new ''National Disability Transition Agency'' to coordinate the scheme; $155 million for ''local coordinators'' and $123 million for ''delivering services in new ways''.
What ''new ways'', I wonder?
Nevertheless, the allocation is great: with two caveats. When fully rolled out, the new scheme will end up costing the government an extra $8 billion a year. That's 0.5 per cent of gross national income, the same amount as Kevin Rudd ''promised'' to be spending on foreign aid by 2015. But look at what's happened to that. Lots of rhetoric, lots of promises, but a bit weak on the follow-through. I wonder if the money will still be there in a few years' time, or if some ''crisis'' or ''re-prioritisation'' may have taken place?
The second issue is that this does nothing to attack the reasons people may have become disabled. The major reason young people join the ranks of the disabled is because of injuries on the roads. Even this program has its winners and losers. Bearing in mind how tight money is, it's great to see promises to fund these programs. But there are many types of disabled people too, and other actions that government can take as well. This offers little hope for reducing the number of people with acquired injuries.
Where should the money be spent? Which sector will win, eventually, when the time finally comes to shovel serious money into this scheme? The disabled? Foreign aid? Defence? Personally, I'm putting my money on another round of tax cuts.
Nicholas Stuart is a Canberra writer.
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