Finance Finance News The government just gave away its favourite budget trick

The government just gave away its favourite budget trick

Governments have used raw numbers to confuse voters ... until now. Photo: Getty
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While the government is frantically negotiating to get its signature ABCC bill through Parliament, it’s having to give all kind of concessions to crossbenchers.

One, secured by Senator David Leyonhjelm on Monday, concerns the political trickery of “raw numbers”.

Statisticians call a number “raw” if there is nothing to measure it against.

Treasurer Scott Morrison used raw numbers to highlight national debt.
Treasurer Scott Morrison used raw numbers to highlight national debt.

For instance, if you won 50,000 units of currency to spend on a mystery holiday, you’d want to know where you were travelling, right? In Indonesian rupiah it would buy a meal; in Germany a brand new BMW.

Raw numbers, in effect, mean nothing.

That’s why politicians love them – they can be used to back all kinds of wild assertions.

By way of example, a few weeks back Treasurer Scott Morrison held a media conference to explain that we were spending “$1.4 billion a week” more than tax revenues could support.

Sounds bad, doesn’t it – many voters just don’t know how bad, because not everyone’s a maths nerd.

Plunging into debt?

It turned out that the government was spending $58 a week that we don’t have, for every man, woman and child. And yes, that’s bad.

But the figure is a still a bit raw – how does it compare, for instance, to Australia’s private debt addiction? The private sector is taking on $92 a week in debt, for every man, woman and child, primarily through the mortgage sector.

Here’s a few more raw numbers, with translations:

  • The Abbott/Turnbull approach to stopping the boats is estimated to cost around $9.6 billion over its first four years. That’s $400 on behalf of every resident Australian, or $100 per person per year.
  • The Gillard government’s “wrecking ball” carbon price raised $4.1 billion in its first year – an annual impost of $170 per person. However, 80 per cent of that was handed back through pension/benefit increases and tax cuts, so the net cost to the economy was about $34 per capita per year.
  • The government’s 15-year submarines program is forecast to cost $50 billion, or $2058 for each of us. In very rough terms that’s $140 per capita per year, subject to population growth and inflation.
  • The marriage equality plebiscite that we’re now not going to have was to cost $160 million, or $6.60 each.
  • The Rudd government’s 2009 GFC stimulus package was worth $42 billion, or $1750 per capita – the fourth-largest as a percentage of GDP in the world.
  • Bronwyn Bishop’s infamous $5000 chopper flight to Geelong in 2015 cost each Australian one-fiftieth of one cent – but don’t panic, she paid it all back.

Senator Leyonhjelm, quite reasonably, thinks politicians should start explaining themselves more often in per capita terms.

leyonhjelm abcc
Senator David Leyonhjelm in Canberra on Monday.

So as part of his negotiations with the government over the controversial ABCC legislation, he demanded that next year’s budget (but not the next mid-year update) would include a great many more per capita numbers.

The senator has asked the government to include such numbers “as far as is practically possible”.

That’s a good thing, because although every journalist in the country has a calculator, quite a few seem unable or unwilling to use them.

More please, senator

At his media conference on Monday, I asked the senator if he would go further in future negotiations. Would he, for instance, demand the budget be split into “recurrent spending” and “capital investment”?

That would help voters immensely because it would shine a light on the real debt and deficit situation beyond all the political noise.

That’s because public borrowing to invest in certain productive assets – mainly infrastructure – actually makes everyone richer over time. Conversely, borrowing to fund recurrent spending is a big mistake.

So would he look at that next time?

“We didn’t ask for that,” he replied. “If I thought of it I might have.”

To read more columns by Rob Burgess click here.

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