On 3rd March 2010 I published “Labor: Hide The Increase“, showing proof of exactly how Labor had changed accounting methods in order to fudge the 2009-10 Mid Year Economic and Fiscal Outlook (MYEFO) budget report.
Now, former Finance Minister Lindsay Tanner has openly admitted that this is precisely the kind of “dark art” that Labor practices. To lie to the public, and cover up their financial mismanagement:
He became adept at “the dark arts”, he confesses, “using some of what are now the standard tricks employed to maximise political appearances”.
These included switching between different forms of accounting, choosing different indicators of spending “according to which . . . suited the argument better”, classifying annual spending as capital, and making commitments beyond the years of the budget period.
Why did Labor hide the increase in spending in 2009-10?
They had made a promise not to increase real spending growth by more than 2%. They had broken that promise. Hence, a little “dark art” with the accounting method. To present figures that would instead show that they had not broken their promise at all.
Read “Labor: Hide The Increase” for full background on how they fiddled the books.
For now though, take a look at how Labor’s own MYEFO numbers have again changed. Proving once again that “estimates” are a bad joke. And that Labor just can’t help but spend far more than even their own estimates.
In the 2009-10 MYEFO, their “Estimate” for real spending growth as a % of GDP for this year (2010-11), using their new accounting method of “CPI” instead of “NFGDP”, was -1.3% (click to enlarge):
Ok. Sounds good right? In November 2009, they “expected” to reduce government spending growth in 2010-11 by 1.3%.
Now, what is their most recent “Estimate” for real spending growth in 2010-11, as updated in the November 2010 MYEFO?
So, even using their new accounting method, Labor’s spending still blew out anyway. Rather than cutting by 1.3%, their own budget mid-year updates show a spending increase of 1.5%.
What’s that in actual dollars? Look at their tables under “Payments” and “$m”. In 2009-10 they estimated government spending for 2010-11 of $340,995 million ($340 billion). A year later, that estimate was revised up to $351,660 million ($351 billion). A blowout in spending of $10.66 billion, over their own estimates.
What’s more, this comes on the back of an increase in government revenue. Not a decrease, as Labor are complaining loudly now, as an excuse for their massive budget deficit black hole.
Look at their own tables again. In MYEFO 2009-10, their “estimate” for “Receipts” in 2010-11 was $297,131 million.
But in MYEFO 2010-11 – released just 6 months ago – their new “estimate” was $313,205 million. An increase in revenue. Not a decrease. An increase of $16,000 million ($16 billion) over their own estimate a year earlier.
Labor’s promise not to increase spending by more than 2% came with eerily similar “tough talk” rhetoric before last year’s budget:
Tanner Warns of Austerity Budget
Finance Minister Lindsay Tanner has flagged that the 2010-11 budget will contain tough savings measures…
The collapse of revenue caused by the global economic downturn would be compounded by the early effects of the ageing of the population, Mr Tanner told the Ten Network yesterday.
“There’s going to have to be tough decisions and ministers are aware of that,” he said.
Again this year, we hear lots of tough talk about the coming budget. Again we hear all the (same) excuses about why it has to be tough.
I have no doubt that tomorrow night, once again we will receive a Labor budget contrived by the “dark arts”.
What “standard tricks” will they use this time?