Dubbo Photo News & Dubbo Weekender

Tracking the government spending blowout

$80 BILLION would buy a lot of aged care.

$80 billion would buy a lot of public education.

$80 billion would buy a lot of water saving measures.

Why $80 billion? What is the significance of this amount?

This is this amount of money spent by the federal government in just the last THREE months.

$34 billion of that was spent in August alone, quietly in the background of the Canberra Backstabbing & Bullying Festival.

What was all this money spent on, and why wasn’t the outrageous spending increase known to the public?

We have journalist and associate professor Michael West to thank for getting this information into the public domain. Working with data expert Greg Bean, their analysis of the last decade of government documents revealed a phenomenal increase in spending in the last three months – spending that was levels of magnitude above the long-term trend. $1.8 billion in April, then $13.5 billion in May, $17.2 billion in June, $13.4 billion in July, and $34 billion in August.

The spending was on “no tender amended government contracts” which is double speak for overspending caused by loopholes in supplier contracts. These amendments and variations to existing government contracts, and purchases from a single unsolicited supplier are particularly alarming given the lack of oversight or transparency on sums which can only be coming from funds raised via borrowing.

Drilling deeper into the data, West and Bean found the Department of Defence was the main benefactor of this profligate spending. The Australian Taxation Office and the Department of Home Affairs were over-the-horizon distant second and third place getters.

The Department of Defence is spending hand over fist on the F35 Joint Strike Fighter. Or more precisely, the original $131 million estimate from the early 2000s has suffered an inevitable cost blowout whilst American defence giant Lockheed Martin sorts a multitude of airworthiness and reliability issues.

A series of amendments to Lockheed Martin contracts has seen incremental leaps to contractual payments into the realms of billions of dollars, for the supply of military hardware that is still dogged by airworthiness questions. And because their US parent company is paid directly, rather than via their Australian subsidiary, the payments escaped Australian company tax.

Whether Australia needs the 72 aircraft we have committed to, is an open question. What I think needs contemplating is the contrast between the song and dance made by government when they announce a blatant boondoggle such as the Future Submarine Project, and the near covert manner vast amounts of taxpayers’ money heads overseas.

Which leads to the question, where is the money coming from? The federal government is borrowing money in unprecedented amounts.

The rate the federal government is issuing government bonds (i.e. borrowing from the marketplace) has increased this year; adding to the gross government debt which has doubled since September 2013 to over $530 billion. With many of these bonds not falling due until the 2040s, the government is kicking the can of debt a long way down the road, and giving the awful impression of not being able to live within its means.

If we were to use the politicians’ favourite but ultimately comical metric of the ‘pub test’, this immense blowout of government spending would be judged as somewhere between negligence, incompetence and outright bastardry.

Especially at a point in time where the care of our elderly and the education of our children, and the funding of these sectors, is justifiably under heavy public scrutiny. Ask any barfly for an opinion whether we should be spending borrowed billions on a military jet of flaky capability; or funding increased staffing levels in Grandpa’s nursing home to allow decent humane care; or making the education system a level playing field; or wholesale drought mitigation and food security measures, and the answer appears obvious.

How is the “national interest” served by declaring we are a nation who looks after our own, while at the same time billions of borrowed dollars are heading overseas via the backdoor?

Greg Smart

By his own admission, Greg Smart was born 40 years old and is in training to be a cranky old man. He spends his time avoiding commercial television and bad coffee.