There are lies, damn lies and statistics.
And in the coverage of Wayne Swan’s first budget, there were some wild disparities in the figures, none bigger than the $100 billion discrepancy between what readers of Crikey and The Australian were told.
This is what I wrote yesterday:
Now Labor has turned off the tap on the Future Fund, leaving a $50 billion unfunded super liability, $50 billion in standard government debt and a government still not really worth anything despite this apparent avalanche of record surpluses and burgeoning special purpose capital funds.
And this is what George Megalogenis told readers of The Australian:
Peter Costello’s Future Fund is full … Mr Swan is the first treasurer in history with no commonwealth debt to cover. There is no borrowing to pay off, or public service super liability to meet.
This page from Budget Paper No 1 shows that unfunded federal superannuation liabilities are projected to be $108.11 billion at the end of next month, rising to $112.12 billion by June 2009.
If the Future Fund really is full, why does its website home page talk about having assets of only $59.6 billion. Presumably this means the unfunded component is still $48.4 billion, unless there is another $50 billion of unallocated cash sitting around.
On government debt, this page from the budget reveals that there will be $49.6 billion of outstanding bonds by the end of 2008-09.
I emailed Megalogenis the following yesterday but haven’t received a response yet:
Am I missing something here as I reckon that’s $100 billion of debt and unfunded super and you’re saying there is none. I just can’t find the $160 billion of cash or liquid assets on the government’s balance that would be required to say there is no liabilities on a net basis either.
The Australian followed up in its budget editorial today by repeating the Megalogenis line as follows:
The investment funds are made possible because of former treasurer Peter Costello’s success in eliminating commonwealth debt and fully funding the superannuation entitlements of federal public servants through the Future Fund.
Rather than super being fully funded, the liability predictions are actually getting worse. This is what the last three budgets have said about the size of the liability at the end of 2008-09:
2006 Budget: $106.8 billion
2007 Budget: $110.26 billion
2008 budget: $112.12 billion
Isn’t the real story here a blowout in super liabilities, which will require even more contributions to the Future Fund, rather than turning off the tap barely half-way to making it fully funded and instead going on a “nation building” spending binge?
Check out this video from the budget lock-up security fiasco
again i say..we are paying millions to so called smart people.[ ecomist} to invest our money in other failed companys..lets start bank of australia…today it was reported our banks ..made $11BILLION..IN BANK {FEES}..in one year..lets get real..put the money back into the australianpeople….
Geez, challenge the orthodoxy and get your head blown off! At least elfin got the point I was trying to make, that it is better invest in the economy now and pay for super liabilities as they fall due – out of future revenues.
Plablo – clearly by posting an academic paper from a well respected post-keynsian think tank I have arrogantly demonstrated their all consuming knowledge! ? I would also question the validity of the analogy you draw with the US deficit, given that I was talking spending on infrastructure and not a misguided war in a far away place…Pull your own head in before you have a stroke…
I thought I remembered reading in Crikey some time back that when Costello invested the Future Fund offshore to stop Kevin Rudd getting his hands on it and the sub prime mortgage fallout in the US started to bite, a lot of that investment went down the gurglar.
If that is the case, why is the media not shouting it from the rooftops? Costello, in my opinion, should have to pay the shortfall back out of his own pocket.
I have never understood why the media have kept so quiet about all the money lost. by Costello’s bad investment.
Thanks for your concern col, but I have been working the whole time to pay for my degree! How will this policy cost jobs? If you invest in infrastructure and education not only do you increase the economy’s capacity for growth and employment, but also its abilty to respond to presssures like meeting super payments for an ageing population. My point was that Stephen Mayne needs to get away from employing Regan era economic rhetoric if he is going to make any useful contribution to the economic debate. All he is doing is pedalling the economic misinformation that got this country into its current situation!
Oh Col, I’ve never heard that saying about the cripple before, i’ll have to ask my Nanna 🙂
Erk. You are a rough crowd!
Surely the bleeding obvious point here is that it doesn’t matter whenthe fund matched the liabilities. After all, as poor Nigel tried to say, is it better to build a government fund (ostensibly to match super liabilities in the future) or so use current revenues for serivices and infrastructure?
The super liabilities are known and can be paid from recurrent revenue: and surely the issue is in managing the benefits and liabilities not their funding?
Finally, you terribly smart people: do you reallky want to encourage governments to build piles of your tax revenue so we can have our very own Temasek? I, for one, like DIY.