The Howard Government’s accounting policies are getting dodgier by the year and some more slippery tactics were once again on display with the coverage of the latest Reserve Bank annual report. This is how AAP opened its account on Tuesday:

The Reserve Bank has handed the Federal Government a $1.5 billion payout, with the central bank now managing assets exceeding $100 billion.

Gee, aren’t we a rich country? Unfortunately not. Just like with Telstra, the government continues to rip out more dividends than profits from the RBA. Underlying earnings were only $1.16 billion in 2005-06, which was at least better than 2004-05, when they were $997 million, but a dividend of $1.383 billion was still extracted.

Much of the growth in “assets” at the Reserve Bank came from the Future Fund, which has $18 billion on deposit waiting to invest. This $18 billion has already been formally recorded as Peter Costello’s budget “surpluses” when in fact they were largely fictional because Cossie has allowed unfunded public service superannuation to blowout by $29 billion to $98 billion over the past decade.

In other words, this $18 billion should have been progressively injected straight into the various Federal superannuation schemes. Instead, Cossie starves the funds of contributions to boost his own “surpluses” then hands it to the Future Fund, which in turn deposits it in the Reserve Bank, which then turns around and starts talking about its huge “asset” pile, as if to suggest these are somehow government monies.

When was the last time you heard National Australia Bank open a profit result by talking about its $419.6 billion in gross assets? Unfortunately, NAB also has $385.3 billion in liabilities, so net assets are only $34.28 billion.

However, NAB’s balance sheet is a lot stronger than the Reserve Bank, which has now had a staggering $21.6 billion in dividends taken out by the Howard Government.

Once you net off liabilities, the RBA only has real “reserves” of $6.29 billion and this has barely risen since 1997. As a percentage of GDP, the RBA’s core capital is down to just 0.75% of GDP which is lower than most other countries.

The Federal Government still has a negative net worth of about $20 billion, but you’d never believe it with some of the accounting ruses they employ. Failing to build up Australia’s foreign reserves will be marked by history as one of the disappointments of the Howard years, given the boom economic times we’re enjoying.

Peter Fray

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