Phony "surplus" budgeting by the Rudd government

If you are spending it, how is it a surplus?

If P.J. O'Rourke is right that giving money and power to government is like giving whisky and car keys to a teenager, then the Rudd Government has just been handed the finest whisky money can buy and the keys to a Maserati. It is a delicious problem that must make other countries green with envy.

Coming to power with a hefty budget surplus that is set to rise to almost $22 billion next year, enjoying the country's biggest boost to its terms of trade for almost 50 years, the question is how will the Government spend the spoils? While the Government has promised virtuous nation building, early signs of its intentions raise fears that its real model is closer to the Japanese Liberal Democratic Party, which built roads to nowhere in order to protect its political hegemony.

Treasurer Wayne Swan apparently prefers a locked box for surplus cash. Well, he did in Opposition. He supported the Howard government's 2005 decision to establish the Future Fund on condition that taxpayers' dollars were safely stored away from politicians' hands in what he called a locked box. He said there could be public confidence in the Future Fund only if "it is in a locked box that can't be raided by the (Nationals), Peter Costello or anybody else". He said it over and over and over again. The phrase "locked box" was Swan's 2005 equivalent of today's mantra, "working families".

Fast forward to 2008, Swan is Treasurer and singing a different tune about what to do with excess cash. He has set aside $41 billion of taxpayers' dollars into the Building Australia Fund, the Education Investment Fund and the Health and Hospitals Fund. While the money will be given to the Future Fund for investment, none of it is in a locked box. Given Swan's stance in 2005, it is disappointing this piece of hypocrisy appears to have escaped a fawning press gallery.

Unlike the Future Fund, where only earnings can be used to assist future Australian governments to meet the cost of public sector superannuation liabilities, the capital of Swan's three funds is not preserved. Unusually, the Rudd Government will be able to draw on both the capital and the earnings, which raises the question of what advice cabinet received from Treasury on this score. Did Treasury advise the Government to place limits on capital expenditure? The Treasurer is not saying. If we are looking for signals as to the real purpose behind these funds, these are telling ones. Especially when one considers that, unlike the Future Fund, decisions about how the money will be spent will ultimately be determined by cabinet.

Neither has the Government yet limited itself with such trivia as project definitions, criteria for use of the funds, an investment mandate to guide the Future Fund on investing pending allocations to specific projects, requirements that there be returns on the investment or timetables (except that the Government has reserved the right to spend funds during election campaigns). Maybe the Government will get around to specifying all these things, but the early signs are very disturbing indeed.

The Government appears to be using the reputation of the independent Future Fund to give these funds a veneer of respectability, to assure us that our money will be wisely spent, but with none of the Future Funds' safeguards to instil public confidence to this end. Similarly, it is possible that the boards of these funds may simply provide a camouflage of respectability. Will their recommendations on spending be made public? If their proposals to cabinet are rejected, will the reasons be made public?

Details are scant. What we do know only raises suspicions that short-term political motivations will drive cabinet decisions. Infrastructure, Transport, Regional Development and Local Government Minister Anthony Albanese, from the Labor Party's Left faction, has said the Government would not insist on commercial rates of return for its infrastructure fund. Instead, it might accept lower rates for projects that achieved "social goals". Albanese and the Treasurer have said the money could start flowing early next year for "nation-building" projects.

When trying to decode Labor speak about nation building and social spending, let's refer to former leader Mark Latham. While Labor would prefer we relegate Latham to the dustbin of history, he plays the useful role of whistleblower about the ALP's hankering for a more muscular, interventionist industry policy. Latham warned that the Building Australia Fund might be used to support the Government's preferred industrial projects, siphoning money to favoured companies and unions. "Always remember," Latham said, "that ministers who talk about nation building have interventionism and favouritism in the back of their minds."

Spending does not become wise spending by calling it nation building. More likely the opposite. Just as tariffs are no more than a tax on working families to support uncompetitive industries and the unions that feed on them, public spending on infrastructure can (if not watched like a hawk) become simply a redirection of taxpayers' money to projects and groups that could not convince real investors to back them. The other fear is that spending will be implemented with all the class envy that Labor ministers can muster. You only had to see the glee with which Albanese axed the upgrading of the North Bondi Surf Club last week to wonder whether infrastructure spending will not necessarily be sent where it will do the most good, but rather in directions that reward old friends and punish old enemies.

There is a particular risk in the present political environment that the federal Government will simply use these funds to prop up incompetent state Labor governments, who are already squealing for their cut of the loot. The money looks as secure as schoolboy Kevin Rudd's lunch money. ("Hand it over, Rudd. Let's keep this clean.") In NSW, for example, the Iemma Government is, at last, desperately trying to break free of union control to sell an inefficient power industry in order to fund hospitals, schools and trains. However, it is easy to see power and other public sector unions demanding that future federal funds be used for state infrastructure so that the states can use their money to maintain featherbedded public service employment.

It is of course possible that none of these scenarios will come to pass. It is possible that when the boards of these federal government funds are actually formed they will be able to fend off the depredations of marauding nation builders. But as we have been told so little about these funds, that is more pious hope than legitimate expectation. Having jemmied the locks of the boxes, the Rudd Government is unlikely to leave the contents undisturbed.

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Some NSW teachers to be paid on merit

THOUSANDS of teachers are set to be judged partly on the academic performance of their students under a ground-breaking accreditation scheme to recognise excellence in the classroom. In an Australian first, the state's most outstanding classroom teachers will be able to apply for merit promotion to newly created advanced level positions. To qualify, teachers will have to demonstrate their students' achievements, provide work samples, submit references from parents and others and allow inspectors to assess their classroom performance.

The new positions - professional accomplishment and professional leadership - will eventually attract higher pay after negotiations with the Government or school authorities. The changes provide a new layer of seniority over the decades-old system of grading teachers automatically on length of service, and gazump the Rudd Government's agenda to reward classroom excellence. They also open the floodgates potentially for an even more comprehensive overhaul of teacher quality aimed at retaining the best teachers and weeding out duds.

Education Minister John Della Bosca said yesterday NSW would have the first comprehensive scheme in Australia to recognise excellence across the whole teaching profession in the state. All schools in the state will come under the new merit scheme judged on standards laid down by the NSW Institute of Teachers. "Outstanding teachers in NSW public, Catholic and independent schools will now have the opportunity to be formally recognised by the profession and the community by meeting high level professional teaching standards," Mr Della Bosca said.

Teachers yesterday welcomed the opportunity to gain recognition at an advanced level and said it would encourage many to remain in the classroom. The Teachers' Federation said it had a range of concerns about how the scheme would work and called for talks with the Government. It is now mandatory for all new teachers to be accredited at the level of professional competence but it is voluntary to apply for the two higher levels. Mr Della Bosca said the Institute of Teachers had developed standards setting out whole of career pathways for teachers in Government and non-government systems.

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Cancer patients kept waiting for life-saving treatment

CANCER patients are waiting up to almost three times longer for life-saving treatment than they should be at some of the state's biggest hospitals. A leaked Queensland Health memo shows patients are being put at risk from radiation oncology unit delays at the Royal Brisbane and Women's, Princess Alexandra, Mater and Townsville hospitals. The patients are expected to wait an average of 27 days despite the "maximum acceptable limit" of 10 days. "Patients for whom delay in starting will have a significant adverse affect on outcome," the QH Radiation Therapy Services memo warns radiation oncologists.

Health Minister Stephen Robertson was unavailable Monday, May 26, but his department admitted treatment facilities were under pressure. The figures have prompted the Opposition to refer Mr Robertson for allegedly misleading State Parliament after he claimed last month there was no centrally collected data for waiting times.

Liberal health spokesman John-Paul Langbroek said the memo was further evidence the Minister was failing to contain waiting list blow-outs. "It is simply not good enough because this is important treatment for very sick people and lives are being put at risk," Mr Langbroek said. "People are dying in our system because of these poor services."

Townsville Hospital was expecting the worst delays with next appointments 28 days away for category two patients, followed by RBWH and the PAH on 25 days. Category three patients were waiting as long as 55 days in Townsville despite a maximum recommended wait of 20 days. The department said all category one patients were cleared immediately.

Queensland Health cancer control chair Euan Walpole said the memo was used to help clinicians plan appointments, adding some patients may be treated sooner. "The Government has provided an extra linear accelerator both at Townsville Hospital and the PA Hospital, and staffing has been increased to extend the operating hours of the available machines, providing additional treatment shifts," Dr Walpole said.

The Courier-Mail has recently highlighted problems with waiting lists for other treatments such as breast cancer due to a shortage of radiographers. Australian Medical Association Queensland president Ross Cartmill said the figures again illustrated the poor planning and chronic underfunding of health. "If these people are being treated for malignancies with radiation, they are suffering very serious problems and must be treated quicker," Dr Cartmill said.

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"Hobbit" discoverer unrepentant

Despite widespread skepticism in the scientific community, he still believes that the hobbit is a new species. He is right about relatives in Australia, though. He should research the pygmy people of Kuranda in North Queensland. One walked right past me last time I was in Kuranda



A scientist who believes he has discovered the "Hobbit'' on an Indonesian island says a relative of the species may have existed in the Top End. Professor Mike Morwood has created an international storm since his discovery of Homo floresiensis -- dubbed the Hobbit because of its small size and big feet -- on Flores in 2003. He presented a lecture on his findings at Charles Darwin University yesterday.

The archaeologist said the Hobbits, who were only about one metre tall and weighed just 30kg, existed on the remote island until about 12,000 years ago. And he believes they could have had relatives living in northern Australia.

Professor Morwood is leading a team of scientists tracking the spread of Homo floresiensis. They are working in Timor and Sulawesi and will soon extend their research to the NT and northern Western Australia. "We are searching for relatives and ancestors of the Homo floresiensis,'' he said. "I think there are a few surprises in store yet, especially for northern Australia.''

Indonesian seafarers on their way to Australia to collect sea cucumbers between 1720 and 1900 are believed to have scattered pottery along the Kimberley coastline. Professor Morwood believes the ancient Hobbits may have used the same sea currents to reach Australian shores. He said his team had found the bones of several Hobbits at Liang Bua cave on Flores. Among the creature's unique features were an incredibly small brain -- just one-third the size of a human brain -- and remarkably long feet. He believes the Hobbit may have existed on the island up to 100,000 years ago.

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