Wednesday, June 24, 2015
Joseph's advice to Pharaoh was to save like mad in the fat years and use the proceeds to tide the Egyptians over the lean years.
It seems Baird and his Treasurer have taken that advice to heart.
With property booming, the government's revenue from conveyancing duty has doubled in the past three years to more than $7 billion a year, with Treasury predicting further growth of 12 per cent in the new financial year, a forecast that could easily prove too cautious.
So Gladys Berejiklian's "barns" are full to overflowing, with operating surpluses stretching as far as the eye can see.
And yet she is maintaining a tight rein on government spending (for which read public sector wage rises).
Though it's possible to point to some wasteful spending – subsidies to the thoroughbred racing industry, grants for real estate development by church-owned schools, and an excessive share of infrastructure spending going to rural areas to buy off the Liberals' country partners – the government's case for hanging tight is persuasive.
For a start, remember that all the operating surplus is used to help fund infrastructure spending without adding to borrowing and jeopardising the state's AAA credit rating. (Whether we should worry so much about ratings is another question.)
But, urged on by Treasury, the government is full of forebodings about revenue threats looming on the horizon, a good reason to save rather than consume in the good years.
For a start, the property boom won't go on forever, and the longer it lasts, the bigger the ultimate budgetary hangover.
For another thing, while it was nice to get our cut of Western Australia's mining royalties windfall from the resources boom, in the form of a higher share of national collections of the goods and services tax, now it's WA's turn to get a cut of our property boom windfall via the same mechanism.
Once the state's poles-and-wires businesses have been partially sold off, Treasury will be getting a smaller flow of dividend income, but that would have happened anyway now the national electricity price regulator has belatedly stopped those businesses from overcharging us (while their state government owners looked the other way).
Perhaps the greatest threat of lean years to come is Tony Abbott's plan, announced in last year's budget from hell, to cut federal grants to public schools and hospitals by $80 billion over 10 years from 2017.
NSW would cop about 30 per cent of the cuts. Berejiklian says they would be "unsustainable" and she's right, meaning they're a bigger problem for the Feds than for her. They're just the last bit of 2014 political stupidity remaining on Abbott's backdown to-do list.
Berejiklian claims the credit for NSW growing faster than the rest of Australia, after lagging in the years before the Coalition returned to office.
But it's a swings-and-roundabouts thing. Does she really want us to believe it was she who brought the mining construction boom to a halt? Or she who cut interest rates to record lows?
At least she'll be ready for the next downswing in our fortunes.