03/06/2010 - 00:00

Guilty of politicking the piggy bank

03/06/2010 - 00:00

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MOST economically minded parents introduce their children to budgeting at a young age.

MOST economically minded parents introduce their children to budgeting at a young age.

Fifty cents for a tooth here, two dollars for raking up the leaves there, with a small sum accumulating in the piggy bank and used for lollies or a new toy.

What this encouraged was a discipline of forward thinking, planning, budgeting if you like, to harbour money sense as adulthood beckoned, ensuring that unexpected events were planned and catered for, while also focusing on incomings and outgoings of the current year.

The same principle applies, albeit on a significantly larger scale, to the state budget.

Premier Colin Barnett, who unexpectedly took the Treasury portfolio in April after Troy Buswell was forced to resign, referred to this forward planning element of budgeting as ‘never-never land’, a just-out-of-reach projection.

The statement landed him in hot water.

Media outlets interpreted his reference to never-never land as blasé, “something that the public shouldn’t spend too much time worrying about,” one commentator said.

But in the context of question time in the Legislative Assembly, where the statement was made, it could be interpreted differently.

It all came about when opposition Treasury spokesman Ben Wyatt challenged the premier in regards to a statement he made on ABC radio two weeks ago.

“I regret that those [electricity] increases have been so large, but I can say to the people of Western Australia, that is it; we’ve basically taken the medicine now. As a community, we’ve shared the burden,” Mr Barnett told the radio audience.

Mr Wyatt then questioned how the premier could make this statement when, in the budget, it is clearly outlined that electricity costs are set to increase by 22.3 per cent in 2011-2012 and by a further 14.7 per cent in 2013-2014.

“Why has the premier misled the people of Western Australia about further increases to their bills?” Mr Wyatt quizzed.

Mr Barnett responded by explaining the nature of forward estimates; forward being the operative word.

“We are actually never in the year of a forward estimate; we are only ever in the current year and the current year’s budget has been presented,” he said.

That is, each year the actual figures for the previous budget are outlined as well as the budget for the current year, the estimated actual budget for the current year and then a forward estimate for the next three years.

“It is an indication of what Treasury projects forward. Before next year comes around, the cabinet will make a decision on the cost of electricity, water and transport and the increases will be announced.”

A kind of plan for the worst, hope for the best strategy.

“The forward estimates are for the future years. They are out there in never-never land; we never, ever get there. Yes, this year consumers have been hit by big increases in electricity and water charges but they will not experience similar big increases in future years,” Mr Barnett reiterated.

In other words, it is all well and good for Treasury to make projections about what the increase in electricity bills for the average ‘working family’ will be in 2013, but until the years between now and then are lived out, it is difficult to put a definitive figure on it.

Mr Barnett’s press secretary told WA Business News that all the premier was trying to say was that “there is too much reliance on the forward estimates. It doesn’t count at this stage because the year we are in is 2010”.

And while the Barnett government’s budget has adhered to what so many people experience in their youth as parental monetary guidance, Mr Wyatt raised another question: If the predicted increase in electricity rates for 2013-2014 is in never-never land, and cannot be completely founded, how can the other forward projections such as budget surpluses be celebrated?

“Is his [the premier’s] $652 million surplus in 2011-2012 based on a 22.3 per cent increase in residential electricity bills – yes or no?” Mr Wyatt asked.

“I would be very pleased if in the year 2011-12 WA achieved a $652 million surplus,” Mr Barnett responded.

Asked again whether that surplus would be based on a rate rise for electricity, Mr Barnett answered, “We will not know…” before interjections by several members.

“If you do not know, just sit down,” Mr Wyatt said, to which the premier replied a simple “ok”.

Opposition leader Eric Ripper supported Mr Wyatt, saying “if that 37 per cent increase in electricity isn’t right, what debt figure are you going to own up to premier, because you can’t have it both ways.”

Whether Mr Barnett did indeed sit down is not transcribed in the events of the assembly from that day.

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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