Every Australian CFO would have watched Wayne Swan’s effort yesterday with a mixture of admiration and envy: if only they could get away with such blatant spin.

Australia’s CFO managed to report on his 2012-11 financial year performance by comparing it only with the “profit guidance” he made six weeks before year end when delivering the 2012-13 budget.

Throughout the report there are two columns on each table — the 2011-12 outcome and the estimate at the 2012-13 budget in May. Last year’s result, and the 2011-12 budget, are nowhere to be found, except in one summary table at the start, which carries the prior year outcome but not the budget.

At the top of the Treasurer’s press release is the fact that the 2011-12 outcome of $43.7 billion is $661 million better than the May estimate, which, he boasts, is the smallest variation between those two figures for a decade.

Comparing results with “re-forecasts”, especially recent ones, is pure CFO heaven. Boards and owners, of course, don’t allow their managers to get away with such shenanigans, and generally require budgets to be met and this year’s dollars to be measured against last year’s.

But Australia Ltd’s CEO and CFO have a cabinet, which is in reality a board of subordinates, not directors. The shareholders get to vote every three years and there is no ASX or ASIC breathing down the CFO’s neck to ensure full and proper disclosure.

And so we have the absurdity of reporting cash only, and comparing the 2012 outcome only with the re-forecast made six weeks ago.

The key difference between a company and the government, apart from the huge and unfettered capacity for spin, is the fact that the government’s shareholders pay the revenue, they don’t receive it, so there isn’t a lot of appetite among the managers to remind the owners of how much extra they are paying. It turns out to be rather a lot.

The government’s net operating result for 2011-12 was a loss of $39.6 billion — a 14% improvement on the previous year’s $46.2 billion loss.

That results from an increase in tax revenue of 9.6% — more than three times the CPI — to $289 billion, including a 10.7% hike in tax from individuals and 16.4% more from companies.

Meanwhile, salaries and wages grew by only 1.4% year on year, but total operating expenses, including supply of goods and services, grew by 7.8%: staff costs were apparently held down by using contractors. Total welfare transfers increased by 7%. Payments to the aged went up 7.3%, to the disabled up 9.8% and to “families with children” by 11% and to the unemployed by 6.9%.

So is this good or bad? Does it justify Shadow Treasurer Joe Hockey’s statement that the government is incompetent and can’t be trusted with the nation’s finances?

Well it’s not a good result, it must be said, especially when you consider that the cash outcome for 2011-12 of $43.7 billion was almost twice the original budget of $22.6 billion that was brought down in May 2011. If cabinet wasn’t a board of acolytes and subordinates, lips would be pursed, bonuses cancelled. As it is, we just re-forecast with six weeks to go and compare with that instead.

The picture that emerges from comparing this result with the year before is of a government that got a $28.2 billion uplift in revenue thanks to wage inflation and the resources boom and handed $11 billion of that as extra welfare, increased operating expenses by $9 billion and reduced the loss by $7 billion.

Vast incompetence? Not really, but it’s not great either.

*This article was first published at Business Spectator