On March 29, Crikey described the claims of a black hole in the NSW government’s finances as “a load of statistical noise and rubbish” and “a rounding error”. Yesterday, an inquiry report from the man appointed by new Premier Barry O’Farrell to get to the bottom of that black hole supported that contention — ie, there is no hole. But what about the poor public servant who is being forced to reapply for his job?

According to media reports this morning, acting-Treasury secretary Michael Lambert wrote: ”There is no evidence of any misreporting or non-utilisation of available information.”

The so-called budget black hole was, according to Lambert, due entirely to revenue shortfalls of $500 million a year, due to weak GST revenues and an expected slowdown in property transactions over the next four years. They are factors other governments, new and used, are complaining about.

According to Lambert, the shortfall is a budget variance of ”less than 1%”: in other words, a rounding error.

Lambert also cast doubt on O’Farrell’s figure because it was based on five-year forecasts and not the usual four-year basis for budget comparisons (a point made by Crikey). Lambert suggested a more realistic figure was $1.93 billion.

And in terms of the total budget spending over the next four years of more than $240 billion, that $1.93 billion is indeed a rounding error and nothing more.

So O’Farrell’s bombastic claims that Labor ”cooked the books” to cover up a $4.5 billion hole in the state’s finances are wrong many times over. Not that he was willing to face up to his error yesterday. He tap-danced his way through to a new claim, as the SMH reported this morning:

“Releasing the report yesterday, Mr O’Farrell said it ”confirms that Labor did indeed cook the books” because it confirmed that Treasury was directed by Labor to redistribute rail spending across the budget forward estimates to prevent it going into deficit.

“It meant that instead of going into deficit in 2013-14 the budget was forecast to be $129 million in surplus when the half-yearly budget update was published in December.

“Mr Lambert said that Labor’s decision was ‘not inconsistent with accounting standards’ and was identified in the half-yearly update.”

O’Farrell rejects that, claiming it is only done in certain circumstances, and he completely avoided the fact that it had already been disclosed. That’s an inconvenient truth.

But that pales besides the complete act of bastardry that the Premier is doing to the former head of Treasury, Michael Schur, who was sent on leave when O’Farrell first aired his black hole bulldust and is now being forced to reapply for his job by the putative NSW Treasurer, Mike Baird (who had his portfolio stripped of many functions by O’Farrell, without complaint).

The Australian’s NSW political reporter, Imre Salusinszky, this morning quite rightly belts O’Farrell for treating a senior public servant this way, and a public servant who proved his independence by not supporting the former Labor government’s power sell-off in an appearance before the state’s upper house inquiry.

“So O’Farrell has chosen to begin his premiership with a disgraceful politicisation of the state’s financial position that also seems certain to deprive him of Schur’s services.

“So is he softening voters up for budget cuts or simply trying to deepen Labor’s ignominy? Fiscal credibility was the one strength NSW Labor could lay claim to, even in its twilight. Lambert’s report leaves that secure — but O’Farrell’s credibility damaged.”

And that’s very true. O’Farrell came to power promising a new way of governing in NSW.

The claims about budget black holes is the stuff of everyday political bullsh-t and posturing. The ALP turned that into an art form in its long time ruining NSW.

In his handling of Schur, O’Farrell had continued the usual grubby way the former ALP governments governed, putting themselves first before the rights of individuals, especially public servants with backbone and integrity.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey

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