Terry McCrann: Head of Treasury and tax department must be sacked

Federal Treasurer Josh Frydenberg must sack the heads of the ATO and Treasury over their extraordinary financial overestimation of the JobKeeper program, writes Terry McCrann.

The head of Treasury, Steven Kennedy, and ATO Commissioner Chris Jordan must both be sacked for either deliberately misleading the Australian public or breathtaking incompetence the like of which I doubt we have seen before, or arguably both.

If Treasurer Josh Frydenberg refuses to sack them, the Prime Minister, Scott Morrison, must order him to do so on pain of his own sacking if he refuses.

The logic is inescapable: if Frydenberg refuses to sack the duo he would be endorsing and indeed adopting their deception/incompetence.

The statement put out by the duo jointly on Friday to “explain” why the JobKeeper program was now “only” going to cost $70 billion instead of the estimated $130 billion was quite simply an attempted butt-covering disgrace.

Both Treasury and the ATO individually and combined stuffed up big time.

Treasury estimated a program would cover over 6 million workers; it turned out to be only 3.5 million. That is — just ever so slightly — outside any reasonable margin of error. It is well and truly in the bullseye of the dartboard of incompetence.

Then the ATO followed through by being unable to distinguish in its tax data between a tradie employing one apprentice and a hardware chain with a turnover of perhaps $100 million. Jordan and the ATO must be using the same dartboard.

Treasury Secretary Dr Steven Kennedy. Picture: AAP

So did the joint statement issued by the ATO and Treasury on Friday start by fessing up to their mistakes?

Of course not. It kicked off by blaming dumb businesses for filling in forms incorrectly.

They kicked off their attempted butt-covering by stating they’d told the government 6.5 million based on the “the enrolment forms completed by 910,055 businesses”.

Then came not “we were wrong because we stuffed up”, but instead “the ATO’s review of these forms has found that around 1000 of those businesses appear to have made significant errors when reporting the estimate of eligible employees on their enrolment form”.

Ah yes, it was all their fault, those dumb businesses.

The most common error — made, to repeat, by them, employers not us — was 500 businesses with just “1” eligible employee actually reporting 1500. This was because they put the payment — $1500 per employee (with or without the dollar sign? The joint statement didn’t say) — instead of the “1”.

So Joe Tradie of Rosebud puts in a claim for 1500 employees instead of his one apprentice and the ATO doesn’t notice that this might seem to be just the teeniest bit on the high side?

Knock, knock: did anyone at the ATO find it just slightly odd that 500 businesses were all employing exactly 1500 eligible workers, which also just happened to be the payment per employee?

Australian Taxation Office Commissioner Chris Jordan. Picture: AAP

Further, I can do the maths that the ATO — and Treasury — seemingly can’t. This, cited as “the most common error”, only explains 750,000 of the over-estimate.

The ATO and Treasury over-estimated by three million employees, so what caused the other 2.25 million? The deliberately misleadingly butt-covering ATO/Treasury statement did not say.

It had claimed that 1000 businesses had stuffed up their forms. So, how did the second 500 over-count 2.25 million employees; and how come the ATO didn’t pick that up?

The butt-covering extended to why Treasury got the 6.5 million estimate so completely wrong right at the start of the whole exercise back in March when the utterly fatuous “national cabinet” set about closing down the economy.

That’s obviously before a single ATO form was filled in or could have been filled in.

Announcing the program on March 30 the joint statement by the Treasurer and the PM said it would cover around 6 million and cost $130 billion.

The ATO/Treasury statement tried to blame Treasury getting it almost 100 per cent wrong on the health restrictions not having been as “severe as expected” and “not having been maintained for as long as expected”.

The second part is simply false. The restrictions are only now being eased. The level of claims under JobKeeper was a function of the lockdown as it was through April and May; not where it might be headed in June and beyond.

Treasury also came out with this breathtakingly stupid claim: that it’s view of the labour market is unaffected by this reporting error.

Federal Treasurer Josh Frydenberg. Picture: AAP

Are you serious? Treasury thought businesses would be so battered — suffering revenue slumps of 30 per cent or more — that they would claim for 6.5 million workers.

But that now they are claiming only for 3.5 million, that’s irrelevant for jobs?

All this said, now true, as the duo’s statement claimed, the — to repeat, monumentally impressive — stuff-up only related to estimates and not to actual payments.

Those payments were only made against specific individual tax file numbers, so Joe Tradie could not and did not get 1500 $1500 payments for his one apprentice; Just the one payment — at least, well, we hope he didn’t get 1500.

But this goes to the much more important stuff-up: the scheme itself, in the context of the panic by the government in its reaction to the virus.

The government didn’t want to do it, then rushed to embrace it. It also embraced quite brazenly the (much better, more intelligent and more effectively focused) New Zealand scheme — and then stuffed it up.

The biggest stuff-up was locking the payments in for six months when NZ has done it only for 12 weeks. I’ll discuss this tomorrow.

This is very real and consequential. Is the government spending even “only” $70 billion when it should be spending only $35 billion?

Prime Minister: on whose desk is the buck — the tens of billions of bucks — going to stop? It should be desks, plural.

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Originally published as Terry McCrann: Head of Treasury and tax department must be sacked