Plenty of cash for the barrel of pork

Federal Treasurer Peter Costello announced yesterday that the budget surplus for the 2006/7 financial year was $17.3 billion, $3.7 billion higher than what was forecast in the budget in May.  This leads to speculation that the 2007/8 budget will be in surplus by much more than the $10.6 billion forecast in the last budget, up to $3-4 billion more.  This of course leaves plenty of room for the Government to fund election promises.

The government has decided to put most of the additional surplus into a series of investment funds, eg

• the Future Fund - for paying off public service superannuation liabilities
• the Higher Education Endowment Fund
• a new Health and Medical Infrastructure Fund

and the Prime Minister has also flagged a Community infrastructure fund of up to $20 billion being established to fund community infrastructure like libraries and sporting facilities.  Mr Howard says the decision about which projects receive funding will be based on sensible national priorities.  If that is what actually happens, thats fine … but what I expect to happen is that “sensible national priorities” = “things that make us look good in the marginal seats prior to an election”.

I also find it strange that the government announcing a much bigger surplus than expected is accepted uncritically by the media as a good thing.  What about some other things it says:

• the fact that the Treasury underestimated the surplus by 26% only a month before the end of the financial year suggests the government does not have a particularly clear picture of its own finances  … try being a company CFO getting things that wrong - bet you BHP Billiton had a better forecast of its profit - incidentally $13.7 billion, prior to its announcement today.
• we are paying too much in taxes …the government has more money than it knows what to do with - and will inevitably waste plenty of it on pork barreling for the election, not to mention general inefficiency in the public sector (I’d rather they they give me my share back and I’ll decide how to invest it wisely or waste it on flashy consumption).
• the government is fudging at budget time, using conservative assumptions to understate what is most likely to happen … thus looking like heroes when the actual result for the surplus comes in way above the forecast.

Waiting to see someone put questions like that to Messrs Costello and Howard.