The latest edition of Private Eye magazine takes aim at the British Prime Minister in the following terms:
Gordon Brown remains oblivious to the irony of blaming banks’ off-balance sheet jiggery pokery for current financial turmoil after a decade of saddling public services with hundreds of billions in PPP liabilities precisely so they could stay off his books.
He was at it again before the Commons liaison committee last week…(when he called) for “transparency of balance sheets so that these off balance sheet activities cannot be recorded in the way they were before and they have got to be on balance sheet”.
Australia’s state Labor governments are following Britain’s lead by hurtling down the public private partnership road in order to make bogus claims about budget surpluses and debt management.
And has anyone yet heard from a single Australian government about the effect of the global credit crunch on borrowing costs and revenue?
Given that the commercial property market has seemingly frozen, predicted stamp duty revenues are clearly not going to materialise. Surely Victoria can only now dream of pocketing $3.73 billion in land transfer duties for 2008-09.
While public companies have to come out and inform the market of any likely 15% deviation from the previous annual profit, state governments can keep investors and their $100 billion-plus of bonds completely in the dark.
And this at a time when the Labor Government debt issuance will hit a record of more than $30 billion in 2008-09. What sort of banana republic allows that sort of fund raising without providing up-to-date financial information?
Victoria has publicly declared it intends to borrow $4.36 billion in 2008-09, but if you look at this sensitivity analysis published in the budget papers, it is clear revenue will now fall well short of the forecast $37.81 billion.
The predicted $828 million “operating surplus” will probably end up being a deficit and the claimed superannuation expenses of $1.86 billion should be at least doubled to plug the huge hole that plunging markets have put in state super schemes.
However, the biggest hit will come from the $8 billion of investments that Victoria holds for injured motorists through the Transport Accident Commission.
Like every other fund, the TAC has ridden the bull market and generated $980 million of investment income in 2006-07, $480 million of which went straight into state budget revenue. If the TAC was prudent, it wouldn’t have handed over another $500 million in 2007-08 and it won’t contribute the majority of the $1.1 billion that John Brumby is budgeting to collect from government businesses in 2008-09.
But if the TAC decides it shouldn’t pay dividends when making losses, the Victorian Government will have to borrow another $500 million-plus this year. That would add $35 million a year to the budget interest bill and on it goes.
Doesn’t the public have a right to be updated on these sorts of things?
Check out this hard-hitting Mayne Report video calling for Glenn Milne to be booted off the ABC.