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Auditing the audit commission

September 7th, 2012

I’ve just finished a critique of the audit commission. Here’s the Courier-Mail report. There’s another report also due out today from Bob and Betty Walker, who were commissioned by the QCU. I did mine independently, but, like them, with the aim of being out in time for next week’s Budget. From the CM report, it looks as if we are in fairly close agreement, which isn’t that surprising – much of the analysis is the same as that we both used in critiques of the previous Labor government’s asset sales policy.

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  1. Kadaitcha Man
    September 7th, 2012 at 09:28 | #1

    Thank you for this comprehensive debunking of the “Commission of Audit” report.

  2. Freelander
    September 7th, 2012 at 10:29 | #2

    Although so banal as to be best avoided, these “audits” which are nothing more than political stunts with predetermined fact-independent and fact-ressistant “findings”, beg for the audit of audit title “Doesn’t (or does it) add up(?)”

    Note, you resisted the urge.

  3. daybee
    September 7th, 2012 at 11:51 | #3

    Great work! BTW in your PDF para 2 of ‘Introduction’ seems to have something missing from the last sentence.

  4. Ikonoclast
    September 7th, 2012 at 11:57 | #4

    Once again, a straightforward financial and economic analysis illustrates, irrefutably, that the neo-conservative’s budget assumptions and politically motivated audits are flawed. But will the facts ever gain traction or can the neocons play this dishonest game indefinitely?

    Our education system fails, by design, to produce citizens who are financially and economically literate and numerate. The emphasis on narrow technical and vocational training is designed to produce only factory fodder and cubicle chooks. It is the intention of the neocon system that the public be kept ill-educated and easy to fool and manipulate.

    Finally, it is no surprise that Peter Costello headed the whole disinformation and propaganda exercise.

  5. John Quiggin
    September 7th, 2012 at 12:13 | #5

    @daybee
    Thx. Fixed now, I hope

  6. Troy Prideaux
    September 7th, 2012 at 12:34 | #6

    I agree with the Land Tax adaptation and the concept of broadening the tax base, but I’m less than convinced about lowing the payroll tax threshold. I’ve never been keen about taxes that penalize businesses for employing people. Just an opinion though.

  7. Ben
    September 7th, 2012 at 13:15 | #7

    Detailed analysis of a long-standing but nasty tradition. I might have guessed that John Howard was the first. Thanks for spelling it out for ordinary people. This is the sort of thing that people would get medals for in a sensible world.

  8. John Quiggin
    September 7th, 2012 at 13:52 | #8

    @Troy Prideaux I’m not a huge fan of payroll tax, but the states don’t have anything better (except land tax, which is never going to be a major revenue source), and high thresholds make it even worse.

  9. Tom
    September 7th, 2012 at 14:12 | #9

    @John Quiggin

    Land tax shouldn’t be much of a problem, but I’m not so sure about raising taxes (such as payroll tax) in the current economic climate. All this controversy about budget deficit is non-sense anyway. From checking historical statistics, budget deficit don’t necessary cause an increase in public debt as a % of GDP, in fact for the US (1957-1980), and Australia (1948-1956, 1968-1974) the public debt as a percentage of GDP falls significantly even when the budget is in deficit. Its more risky to raise taxes right now than running a budget deficit.

  10. David Richardson
    September 7th, 2012 at 16:19 | #10

    I enjoyed that.

    But even if we stick to the Qld budget papers the picture is worse than it looks.

    The massive $30 billion in unfunded super liabilities is just a notional liability. Also the expenditure figures include some notional interest on the super liability as well as new liabilities arising out of current employment. In the meantime actual payments made to superannuated public servants is included as a expense item. So super payments are made/and recorded on a pay as you go basis but there is also the pretense that the government is making provision for future funding. Lots of double counting. (for a fuller explanation based on the Commonwealth budget see ‘Accounting for a super mystery’, The Public Sector Informant, 7 June 2011.)

    Without the unfunded super liability the net debt more than completely disappears and Qld enjoys a positive financial balance.

  11. September 7th, 2012 at 17:33 | #11

    I am surprised that Doug McTaggart was involved with the Costello report. He is a bright guy and should know better.

  12. September 7th, 2012 at 18:53 | #12

    Excellent report. Its sad that so many LNP supporters use inflated claims of debt as an excuse for the pure bastardry of the Newman government. What is worrying is the vindictiveness expressed towards identified political enemies ; public servants, unionists, people who read books and the like. In that way, they are proving worse than Bjelke Petersen government which at least was composed of honestly corrupt hicks.

  13. fred
    September 7th, 2012 at 19:01 | #13

    Same thing happened in SA after the election after the state went ‘broke’ from the State Bank ‘fiasco’.
    Auditors [from Kennet's Victoria IIRC] arrived in droves and in next to no time produced roneod [remember Roneo?] clone reports that said that not only the best thing to do but the only thing was to sell sell sell state assets.
    Like water, electricity, bank, insurance and anything else that was not nailed down.
    Privatise!Outsource! Disappear!
    Ah, good times.

  14. Ikonoclast
    September 8th, 2012 at 15:26 | #14

    @fred

    “Privatise! Outsource! Disappear!”

    You left out a few steps.

    “Privatise! Outsource! Take big fat fees! Transfer more Wealth to the Wealthy! Disappear! Leave the government to bail out resulting mess with public money! Rinse and repeat until all public wealth is plundered. Laugh at the numerous poor people from gated communities of privilege!”

  15. Ikonoclast
    September 8th, 2012 at 15:26 | #15

    @fred

    “Privatise! Outsource! Disappear!”

    You left out a few steps.

    “Privatise! Outsource! Take big fat fees! Transfer more Wealth to the Wealthy! Disappear! Leave the government to bail out resulting mess with public money! Rinse and repeat until all public wealth is plundered. Laugh at the numerous poor people from gated communities of privilege!”

  16. September 8th, 2012 at 15:42 | #16

    I just read on ‘The Automatic Earth’ about how the Hungarian PM has told the IMF to get lost. Surely what we’re always getting in Australia from our major parties is ‘neo-liberalism’/disaster capitalism? Anyway, I liked this paragraph:

    “Basically, what the IMF demands is what it has always demanded through the years from countries it lends money to: cut pensions, cut the public sector, cut benefits yada yada, and then privatize, open markets, and open financial systems, so international operating conglomerates can move in and divvy up the spoils – “create a more ‘business friendly’ environment to boost growth” -. The IMF is the poster child for disaster capitalism, no matter how you twist and turn it. And Orbán can see clearly what is being done to Greece, which is just around the corner from Hungary.”

  17. September 8th, 2012 at 15:42 | #17

    I just read on ‘The Automatic Earth’ about how the Hungarian PM has told the IMF to get lost. Surely what we’re always getting in Australia from our major parties is ‘neo-liberalism’/disaster capitalism? Anyway, I liked this paragraph:

    “Basically, what the IMF demands is what it has always demanded through the years from countries it lends money to: cut pensions, cut the public sector, cut benefits yada yada, and then privatize, open markets, and open financial systems, so international operating conglomerates can move in and divvy up the spoils – “create a more ‘business friendly’ environment to boost growth” -. The IMF is the poster child for disaster capitalism, no matter how you twist and turn it. And Orbán can see clearly what is being done to Greece, which is just around the corner from Hungary.”

  18. rog
    September 8th, 2012 at 17:40 | #18

    @Ikonoclast More properly should be – engage financial industry for expert opinion then engage financial industry to implement recommendations made by…

    …I cant wait for the new Abbott govt to privatise Medicare private so I can get a heap of shares for nothing (/joke)

  19. rog
    September 8th, 2012 at 17:40 | #19

    @Ikonoclast More properly should be – engage financial industry for expert opinion then engage financial industry to implement recommendations made by…

    …I cant wait for the new Abbott govt to privatise Medicare private so I can get a heap of shares for nothing (/joke)

  20. Freelander
    September 8th, 2012 at 23:09 | #20

    “Loonies of the World Unite!” (Nothing to lose. Lost already. Obviously.) No need for the call to go out! They’ve done that and their jamboree is ahappening in Prague! http://www.klaus.cz/clanky/3178 As we know Freeland aka Iceland was one of the libertarian loonies pet projects. How quickly it fell from being ‘poster’ country for what libertarians can do when given reign in 2005 to orphaned failure soon after. Well having lost oodles of other people’s and their own money, Iceland is now rapidly being rehabilitated, or at least if one of the libertarian comics is to be believed. Maybe they have hired Australia’s own Windspittle to expunge their recent black armband history? But no, surely some history is too recent for even the multifaceted ‘spittle? reason.com/archives/2012/09/07/iceland-provides-a-blueprint-for-survivi

  21. Freelander
    September 8th, 2012 at 23:09 | #21

    “Loonies of the World Unite!” (Nothing to lose. Lost already. Obviously.) No need for the call to go out! They’ve done that and their jamboree is ahappening in Prague! http://www.klaus.cz/clanky/3178 As we know Freeland aka Iceland was one of the libertarian loonies pet projects. How quickly it fell from being ‘poster’ country for what libertarians can do when given reign in 2005 to orphaned failure soon after. Well having lost oodles of other people’s and their own money, Iceland is now rapidly being rehabilitated, or at least if one of the libertarian comics is to be believed. Maybe they have hired Australia’s own Windspittle to expunge their recent black armband history? But no, surely some history is too recent for even the multifaceted ‘spittle? reason.com/archives/2012/09/07/iceland-provides-a-blueprint-for-survivi

  22. Freelander
    September 8th, 2012 at 23:10 | #22

    Are these people ever in need of an audit?

  23. Freelander
    September 8th, 2012 at 23:10 | #23

    Are these people ever in need of an audit?

  24. September 16th, 2012 at 19:15 | #24

    So, in essence, the black budget hole is so exaggerated as to be fiction. Nice work pointing out the lengthy expense that goes into developing a sound bite (one hundred billion dollar black hole!). One must admit that Newman has gotten away with it, if the only analytical criticism received one teensy newspaper article. Hopefully your report will be circulated enough that after the next state/fed election, the media can call bull on the whole charade before it happens. But I doubt it.

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