Back in the black or still in the red?

Robert Carling

Wayne Swan’s boast that the Commonwealth budget is ‘back in the black’ deserves a sceptical response. For starters, the much-vaunted surplus does not appear until 2012–13. The budget places so much emphasis on estimates for 2012–13 that one could be excused for thinking this is May 2012. In fact, we are in May 2011 and the budget just handed down is for 2011–12. It features a $22.6 billion deficit in the midst of economic conditions (near full employment and historically high terms of trade) that could easily justify a surplus.

The ‘surplus’ estimated for 2012–13 is so small as to be more accurately characterised as a balanced budget. Moreover, Treasury’s 2010 estimates suggest that even a balanced budget in 2012–13 would represent a structural deficit (a measure that strips out unsustainable favourable effects such as the high terms of trade).

Those criticisms aside, the government’s broad goal of tightening fiscal policy is entirely appropriate and should be beyond controversy. More interesting is how they plan to get there.

Swan’s speech trumpeted $22 billion of ‘savings,’ but on closer inspection the savings effort appears timid. The figure of $22 billion is achieved by conflating expenditure cuts and tax increases, and then adding the results over four years to reach a large number. This is pure spin.

The actual expenditure savings year-by-year amount to little more than 1% of total budget outlays, and even those savings are more than offset by new measures that add to outlays. By contrast, the expenditure savings in the last Commonwealth budget that could truly be characterised as ‘tough’ (the 1996–97 budget) were about 5% of outlays, or 3% to 4% after allowing for offsetting new spending measures.

Revenue will do most of the work in putting the budget ‘back into the black’ in 2012–13. The government is relying on a 25% boost to its revenue over the next two years. While most of that represents an automatic cyclical rebound, the budget supercharges the rebound with policy measures that add further to revenue in the next two years (measures that Swan classifies as ‘savings’).

Some of the expenditure and revenue measures in this budget are worthy in their own right, but it is disappointing that in aggregate so little has been done to reverse the 17.4% increase in inflation-adjusted Commonwealth outlays that occurred in just two years (2008–09 and 2009–10) when fiscal stimulus was in full swing.

The above is a press release from the Centre for Independent Studies, dated 13 May. Enquiries to cis@cis.org.au. Snail mail: PO Box 92, St Leonards, NSW, Australia 1590.





Greenie house of straw goes up in flames

IF THE story of the Three Little Pigs showed how vulnerable straw houses can be, the point was again illustrated in a recent case before the NSW Court of Appeal.

In 2007 Ian Reed was building a house near Orange, in the state's central west, using compressed straw bales for the external walls.

An owner-builder, he brought in tradespeople for more specialised jobs. One, a plumber, inadvertently set fire to the structure on January 12.

The court heard Bruce Warburton was soldering copper piping when his oxyacetylene torch ignited hand-packed straw behind a bathroom wall, burning down the building.

Mr Reed sued Mr Warburton in the District Court for negligence. After his claim was dismissed last year he appealed.

In the Court of Appeal, Justices John Basten and David Hodgson, and Acting Justice Kenneth Handley, overturned the earlier judgment, finding errors in the way the judge determined the issues in the case.

They ruled Mr Warburton was negligent, but only awarded Mr Reed $105,000 in damages - half the amount he sought - because he failed to tell the plumber about the hand-packed straw in the internal wall.

The court heard a straw bale had ignited when Mr Warburton was working in the kitchen, but was quickly extinguished with a bucket of water the men had on hand.

It was a different story when Mr Warburton worked on the bathroom, where Mr Reed had filled a gap in an internal wall with loose straw.

"It burnt back into the wall and roared,"' Mr Warburton told the District Court. "It just all ignited and flew straight up like a chimney."

Justice Basten said while Mr Warburton failed "to take reasonable care to avoid the risk of setting fire to the straw", there had been contributory negligence by Mr Reed.

Martin Urakawa, an architect with expertise in environmental design, said building with straw was part of a movement towards environmentally friendly building materials.

"People use it because they can build and shape it themselves and it's quick for them to put up," he said - but fire was, obviously "a drawback".

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More brainless government

English tests for Australian born taxi drivers

NEW English tests introduced for would-be taxi drivers have offended Australian-born applicants who say they should not have to pay for a certificate to prove they can speak their own language.

Queensland Transport and Main Roads introduced the English assessment last November in response to the Workplace Ombudsman's report, which made 56 recommendations to reform the taxi industry. It requires all applicants to complete a $90 online test provided by the Central Queensland Institute of TAFE, regardless of nationality.

The assessment is a new national standard being introduced Australia-wide.

Since its introduction in Queensland, 869 people have undertaken the assessment with one in six (186) failing.

Queensland Taxi Advisers Incorporated spokesman John Rahilly said a "commonsense approach" was needed for the test's delivery. "I think it's ridiculous that English-speaking drivers have to sit the test, and there are no exemptions," he said.

"The initial reason for the test was to remedy the problem that already exists in the industry whereby many current drivers are not fluent in English. "As it stands, drivers employed before November 2010 do not have to be tested."

He said the $90 cost amounted to about half a day's takings for many cabbies, possibly even more than half. "You can be lucky to clear $175, so $90 is a significant sum for any driver," he said.

Veteran cabbie John Barker, from Bribie Island, said he was stunned when he reapplied for his driver's authority and was told he would have to undergo the assessment. "I was just stunned. I hadn't given up all that long ago, only six months or so, after 25 years of driving a cab," Mr Barker said.

"I admit that my junior pass in English was in 1965 but spending most of my 61 years in the country . . . one would think the transport department could be a little more understanding." He said he refused to pay $90 to be assessed on his English. "I will not be paying for a certificate to prove that I can speak my native language," Mr Barker said.

Mr Barker said he had decided not to resume his former career, and would remain on the pension instead. "I was only intending to work part-time but it's just not worth the hassle," he said. "If they're going to be that silly and they can't recognise a high school certificate, it's just ludicrous."

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Surgeon in threat to quit Queensland Health over lost wages in payroll farce

AN EXPERIENCED surgeon is threatening to quit Queensland Health as new figures reveal staff went without pay almost 2150 times during the payroll disaster.

Ear, nose and throat specialist Garrett Fitzgerald believes at least $40,000 of his wages may have gone missing in the 14 months the glitch-plagued system has operated.

The Toowoomba surgeon is just one of hundreds of staff left out of pocket, with figures obtained by The Courier-Mail revealing 11,900 emergency payments were handed out since the system went live last March.

Dr Fitzgerald, who works in private practice but offers his service part-time to the Toowoomba Hospital as a visiting medical officer, said the new system could not cope with the different payments he received for regular and on-call time.

Both were supposed to be salary sacrificed into his super fund but Dr Fitzgerald claimed the on-call payments had gone missing. Dr Fitzgerald said he raised concerns with payroll staff at Ipswich late last year but was only last month offered a firm response - the money was sent to his bank but not assigned to any account.

Dr Fitzgerald worried the cash had landed in another person's pocket and said he was now paying a bookkeeper $70 an hour to trawl through his accounts searching for deposits. "This money seems to be floating in the atmosphere somewhere so I have to find it or prove that it didn't make it to me. If I did it to my employee, I'd be in jail," he said.

Queensland Health deputy director general human resource services John Cairns this week claimed Dr Fitzgerald's pay had been deposited into the bank account he nominated and said "he has not advised us" about payment problems.

But Dr Fitzgerald said he regularly liaised with Ipswich payroll staff and had also sent letter of complaint on March 23 to two district executives and Queensland Health director-general Michael Reid. A letter of reply sighted by The Courier-Mail written by Director of Medical Services Peter Gillies acknowledged "outstanding issues" and apologised for the ongoing "error".

Mr Cairns said Dr Fitzgerald, like all Queensland Health employees, could access one-on-one payroll assistance and cash payment of any outstanding money. "There is no reason for him to be out of pocket," Mr Cairns said.

Dr Fitzgerald said he would resign if his investigations ruled he had not been paid.

Opposition health spokesman Mark McArdle said: "This is just one more example of a system that is spiralling out of control and costing Queenslanders money."

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