How does Joe Hockey find $280 million to lend to farmers from a cash-strapped budget? The answer is: he doesn't.
The money comes from the ether, the hardly ever-ever. It's off-budget. Without meaning to, his Coalition predecessor, Peter Costello, paved the way.
Within months of gaining office Costello received the report of his Commission of Audit. It recommended a new form of accounting that would end forever the sleight of hand by which the Hawke and Keating governments had appeared to improve their budget positions by selling money-making assets (such as Qantas and chunks of the Commonwealth Bank).
They had been booking the proceeds as income without subtracting the resulting loss of future income. The new system, which at first was pure accrual accounting, meant that future sales of money-making corporations scarcely touched the bottom line.
What few at the time realised was that it would also mean spending to buy or build money-making assets.
Barnaby Joyce and Tony Abbott are doing it with the drought concessional loans scheme. They are planning to borrow at 3.5 per cent and lend at 4 per cent. They ought to make money unless masses of farmers default.
They are banking on a low 3 per cent default rate.
