THE DISTILLERY: Budget tricks

Treasurer Wayne Swan's budget surplus in 2012/13 is a work of fiction, or illusion. It's conjured from two crucial ingredients. Firstly, creative accounting – that robs Peter to pay, well, Peter at a different time – and spending cuts that are irreconcilable with previous Labor policy amid economic turbulence. While most commentators make reference to the alchemy accounting, economist Saul Eslake actually takes the time to show how Swan pulls off this surplus magic trick. One business writer points out that the treasurer was singing a very different tune after Lehman Brothers went down, while another has the stones to nominate what they'd cut from the budget. And it isn't just about the surplus this morning, with one writer uncovering some unsettling details about asset purchases in the super industry in a piece that's well worth a read.

But first, there's the budget. Writing in Fairfax newspapers, economist Saul Eslake explains precisely how the government has transferred $5.5 billion of spending from 2012/13 to 2011/12 in order to achieve its brilliant surplus number. It's a detail that other commentators reference in passing, but don't actually explain.

"It is making a further 'advance payment' of $1.4 billion to Queensland in 2011-12 'to ensure that reconstruction work can progress as quickly as possible' – a worthy objective, perhaps, but mightily convenient in terms of achieving a surplus in 2012-13 (and something which it classifies as a ''parameter variation'' rather than a 'policy decision'). It is 'accelerating' another $1.4 billion of infrastructure spending from 2012-13 into 2011-12. And these are in addition to the payment of some $2.7 billion by way of 'compensation' to households for the introduction of the carbon tax, which doesn't start until July 1, 2012, in the last few weeks of June next year.”

Secondly, The Australian's Peter Van Onselen gives a good account of just how poorly the major parties have performed on the topic of debt and deficit. He starts by backtracking to the government's original stimulus policy during GFC Mk1, which is unrecognisable after Swan's performance yesterday.

"Here we are almost four years later and the approach is a polar opposite of what Labor told us had to be done last time. How does that compute? We are being told now that a tight fiscal approach is the key to the Reserve Bank being in a position to cut interest rates. But that is what the Coalition gave as its reason not to embark on the second round of stimulus spending in 2008. It's hard to keep up with the policy inconsistencies.”

Thirdly, few commentators were willing to stick their neck out and nominate another specific item Swan could cut from the budget – business writers have quasi-constituencies of their own. But the Australian Financial Review's economics editor Alan Mitchell found some often-spoken of, as yet largely unallocated, funds that could be put to better use.

"As Tony Abbott says, there are billions of dollars in waste embedded in the federal budget. And high on that list is a good part of the $6 billion that, he reminds us, was put aside by the Howard government for water-saving infrastructure in the Murray-Darling basin. The money was committed in the belief that the alternative – buying water rights – would destroy the economic and social life of the region. It was a waste of taxpayers' money.” Agree with him or not, at least he put some skin in the game.

Finally, in non-budgetary matters, The Age's Adele Ferguson uncovers some less than reassuring practices in the superannuation industry when it comes to asset purchases.

"The impending sale of a stake in the $850 million South Australian Flinders Ports group has put the spotlight on the superannuation industry and the need for a long overdue scrutiny of asset consultants, super fund trustees and potential conflicts of interest. It comes at a time when the European crisis has smashed global equity markets, crunching the value of the $1.3 trillion retirement savings pool. It also comes as pressure mounts on the industry to be more transparent about its investments.”

But it's back to the budget to round out this morning's commentaries. They all touch on the same suite of points to varying degrees: the surplus could be scuttled by a slowdown in Europe or China; it's based on dodgy accounting or unconvincing cuts; it comes at the worst possible time; and it's motivated by ludicrous political realities. Coming in on some of these points are the Sydney Morning Herald's Michael Pascoe, the AFR's Chanticleer columnist Tony Boyd, The Australian's John Durie, The Australian's economics correspondent David Uren, The Australian's national affairs correspondent Jennifer Hewett and the Herald Sun's Terry McCrann.

Separately, McCrann takes the time to add some more thoughts on Qantas, on the off chance that the budget story was well covered.

Meanwhile, The Age's Michael West finds Australia's big four banks, along with Citibank, Bank of America and Mizuho looking as if they jumped the queue for funds from ABC Learning just before the collapse of Eddy Groves' old stomping ground. His colleague Peter Martin investigates the prospect of using tweets to measure sentiment for interest rates, with the Federal Reserve Bank of New York putting money up for the idea.

The Sydney Morning Herald's Elizabeth Knight makes a good go of gender inequality and concludes we've become expert at charting it but inept at addressing it.

And in resources, The Australian's Bryan Frith joins John Durie by calling on the Australian Securities and Investments Commission to investigate the inflated volumes at BlueScope Steel before the highly diluted capital raising, while Matthew Stevens reports on comments from Vale that the iron ore price is unlikely to go beneath $US120 a tonne – that's the point at which low-margin Chinese miners drop out of the market.