It’s AFL grand final eve so stand by for an avalanche of bad news as various cynical media players “take a dump” in the hope that no-one will notice amid footy fever.
Leading the charge is keen Essendon fan Peter Costello who has just dropped the final budget outcome for 2004-05. It’s an embarrassment of riches, with the underlying cash surplus coming in at a record $13.6 billion, a whopping $4.4 billion ahead of the forecast just four months ago in the May budget. Who said there’s no scope for large scale petrol tax relief?
Check out sheepish Cossie’s press release here. The lad locks up hundreds of people for many hours when predicting what will happen, but when it comes to releasing the result, we get four paragraphs half way through the Grand Final Parade, no press conferences and not even a boasting quote from Mr Money Bags. The cash bonanza is explained thus:
The Australian Government general government sector recorded an underlying cash surplus of $13.6 billion (1.6 per cent of GDP) in 2004-05.
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The surplus is $4.4 billion higher than expected at the time of the 2005-06 Budget principally because total cash payments were around $3.5 billion (1.8 per cent) lower than expected. This is due mainly to a lower than expected take up of grant and subsidy payments across a range of programmes ($1.3 billion). Also contributing to the underspends were delays in contract negotiations and delivery of goods and services ($0.5 billion), lower wages and salary payments ($0.5 billion), and the rejection by the Tasmanian and South Australian governments of an offer to extinguish state rail superannuation liabilities ($0.4 billion).
Total cash receipts were around $0.9 billion (0.4 per cent) higher than estimated at the 2005-06 Budget. This was predominately due to higher than expected company tax receipts, reflecting stronger company profits flowing from very high commodity prices.
An accrual fiscal surplus of $10.8 billion was recorded for 2004-05. This is $3.8 billion higher than estimated at the time of the 2005 06 Budget.
General government net debt fell by $11.9 billion in 2004-05 to $11.5 billion (1.3 per cent of GDP), the lowest level in 28 years.
It sounds like a failure to fulfil promises and deliver services on a range of fronts, plus the China boom delivering another windfall in company tax. However, how on earth did the government over-estimate salaries by $500 million. Don’t they know what their industrial agreements say? Clearly the public sector unions should have pushed for bigger pay rises.
The boffin can go through all the detail of how Treasury explains away the cash deluge here. We shouldn’t really be surprised because Cossie and his Treasury have been serially pessimistic over the past decade to the tune of more than $25 billion.
Next time we all gather for the budget, perhaps the media should just increase all the figures by the average over-run from the past few years. This sort of form would not be tolerated on the ASX where companies are required to make accurate assessments, not deliberately pessimistic forecasts that are massaged for political purposes.
The biggest spending government in Australian history is showing no signs of changing its spots.