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Monday, 24 June 1996
Page: 2026

Senator WATSON(3.12 p.m.) —The government will not run a mile from this charter of budget honesty. That was the essential issue raised by my colleague Senator Gibson. Senator Gibson confined his remarks to the response given by Senator Short—and a very good answer it was. Senator Sherry, you are the one who ranged widely. It does give the government the opportunity to outline some of those areas where the previous Labor government year after year fiddled the budget figures.

What were the essential aspects of that fiddling? There was a failure to distinguish between capital items and revenue items. Every good accountant knows that in a profit and loss statement you attribute your expense items to those elements that are going to be expired within the period under review, generally the 12-month period.

I wish to use this debate to outline some of the various devices used by the previous government? You might recall, Senator Sherry, that on 22 May 1996, in an adjournment speech, I drew attention to a whole range of the various fiddles, including the failure to distinguish between capital and revenue items. But it was not limited to a failure only to distinguish between capital and income receipts and outlays. Senator Sherry, you are well aware of the devices which include bringing forward tax payments to artificially reduce the deficit. The best example would be in the HECS area. There is also the underestimating of the time that major asset sales would take. This allows the revenue from the sale of an asset to appear in several years accounts, not just the one.

Another device is taking liberties with the receipts from public enterprises by classifying them as dividends or debt repayments, depending on what suits the bottom line. There are examples in Telstra and Australia Post. Madam Deputy President, these are just a few methods of deceiving everybody in the electorate in the budget presentation. It was interesting that a professor from the School of Economics and Finance at Queensland University, Professor Robinson, articulated very clearly some of these deceptions. He did it in one of the prestigious and widely read journals of the accounting community, the journal of the Australian Society of Certified Practising Accountants, the Australian Accountant.

As all true accountants know—this was written for them—you must distinguish, as I mentioned earlier, between capital items and revenue receipts. When you make a profit for a particular year on a revenue account, you do not include capital items. This has been the big problem with the budget. We mix up everything and put it together in an unholy amalgam. This unholy amalgam is presented in such a way that it does not present a clear picture. When auditors of public companies present their report, they say that it represents a true and correct view of the state of the company's affairs.

It is interesting to note that the Auditor-General never puts his signature to the budget deficit. Does it present a true and correct view? It might be an interesting addition to the Commission of Audit's inquiries in relation to budget honesty to ask the Auditor-General to put his name on it, thereby confirming whether that budget statement represents a correct view and whether the issues have been classified according to normal accounting parlance. I would recommend this as a further measure to bring back greater honesty, disclosure and meaning to the budget figures. We can then get away from the concept, held by previous Labor administrations, of hiding the true light and correct position. This great recommendation should be added to the Commission of Audit's recommendations in this charter for budget honesty, which I support.