Labor Can’t Balance Fiddled Books

28 Apr

It seems Rudd Labor’s massive, panicked, and bungled response to the first wave of the GFC – roof insulation, the horrendously wasteful school buildings rort – is now making it difficult for them to keep yet another promise, to keep spending growth below 2% of GDP.

From The Australian:

The government is facing a battle to keep costs under its self-imposed 2 per cent growth cap, with blowouts in some programs and higher interest payments adding to the deficit.

Spending in the federal budget, to be released in two weeks, could be at least $10 billion higher in 2010-11 than was forecast when Treasury updated the government’s accounts last November.

Government officials confirm that the budget will forecast economic growth in excess of 3 per cent, which will trigger the rules devised by Treasury for returning the budget to surplus.

These rules dictate that once growth returns to normal, the government will keep spending growth below 2 per cent after allowing for inflation. They also require it to cover the cost of new spending with savings elsewhere in the budget and to bank any increase in tax revenue.

When the mid-year budget update was released six months ago, it looked as though the spending growth target would be easy to reach in 2010-11 because spending on the stimulus program was expected to fall by about $9bn in that year.

In one of the most popular articles I’ve written – “Labor Fakes GDP By 4.5%” – I showed from the government’s own budget documents how Rudd Labor have “revised” the historical data to artificially increase Australia’s GDP figures. Why is that important?

Because it has allowed the government to hoodwink the public and the lazy “we-check-nothing” media that they can keep spending growth below 2% of GDP.  That seems like an easy promise to make, when you’ve simply faked the GDP numbers upwards.

I also showed in “Labor: Hide The Increase” that, according to the government’s own “adjustments”, if they were required to abide by the previous traditional deflator method for calculating the effect of inflation on government spending, they would fail to meet their own 2% spending cap.

Now, we see from today’s article in The Australian, that even with all their massive fiddling of the nation’s accounts and historical records, the government is still struggling to balance their books.

Perhaps they might ask for the assistance of a qualified, experienced, and honest Accountant?

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