Terry McCrann: The $60 billion good news nobody wanted to own
The $60 billion miss on the JobKeeper forecast is actually good news for many reasons, but nobody want to claim the praise, writes Terry McCrann.
Terry McCrann
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There’s something beautifully delicious about the Federal Government giving companies and directors a mostly figurative but in some cases actually literal ‘get-out-of-jail’ card for dud profit forecasts – just three days after having to ‘fess up to its own, cough, cough, tiny little $60 billion miss on its JobKeeper forecast.
As we all now know JobKeeper – the misapplied copy of the better New Zealand scheme – was originally going to cost $130 billion. Then last Friday the government announced that whoops, it was only going to cost $70 billion.
That figure – as indeed was also the case with the $130 billion – is, as one of my readers would like me to point out, actually only the gross figure.
It’s what is paid out; it doesn’t take any account of the flowback from the income tax that employees who get the money pay in the normal way, or indeed the savings that are made because many if not most of those workers would have been getting JobSeeker (the dole) without it.
It’s also worth me repeating what I wrote last Sunday: the lower figure is all and unqualifiedly good news.
It’s good news that we – and it really is “we”, that is to say, all of you, as it is your money – are only having to spend $70 billion instead of the $130 billion. Both numbers, to repeat, being gross, before flowbacks.
It’s even better news that the economy has turned out to be in better shape than the ‘experts’ predicted: fewer people have lost their jobs than ‘expertly’ predicted; fewer businesses have been quite so battered by the enforced lockdowns.
In this time of “you must listen to the experts”, that’s also something to bear in mind for the future.
Now, I have to correct what I wrote at the start. The government didn’t actually announce the blooper.
Federal Treasury (to stress, not the Treasurer) and the Tax Office made the “announcement” that wasn’t actually an announcement, in a very unusual and in my 50-year time as a commentator utterly unique exercise.
It was headed “Joint Treasury and ATO statement – JobKeeper update.” That’s a strange word – ‘update’ – to use for a $60 billion ‘we were wrong’. Even stranger that it didn’t come from the responsible minister, treasurer Josh Frydenberg.
By ‘responsible’ I don’t mean he was responsible for the mistake; just that he’s the responsible minister for both Treasury and the Tax Office.
The statement said the bureaucratic duo had told ‘the government’ – I presume that meant the treasurer – “late yesterday”. That was on Thursday May 21.
But the Treasurer didn’t see fit to share the good news with the public on either day, far less take ownership of it – the good news of course not the stuff-up – as he is usually wont to do.
Maybe he thought it was too difficult to separate the good news from the stuff-up.
His only press release on the 21st was about an obscure matter to do with “stamping fees”. On the 22nd he had two – on our Triple-A credit rating and regulation of litigation funding. But no room for this.
Astonishingly, a week later we still don’t have an official press statement from the nation’s treasurer on the single biggest budget error in the nation’s history.
Just this bizarre statement from the two top bureaucrats, which was like a weird combination of two naughty schoolboys having been told to write an apology for some misdeed, but which they then truculently present as: “Miss, it wasn’t really our fault; they made us do it”.
The ‘they’ being the businesses which supposedly filled in their JobKeeper application forms incorrectly.
Hmm. It seems nobody wanted to directly own the ‘$60 billion good news’.
Not only did Frydenberg stay a million media miles away from the statement, so also did the two heads of treasury and the ATO as the joint statement was unsigned.
Now we see that Reserve Bank governor Philip Lowe has called on the government to consider extending JobKeeper beyond the six-months.
If it does, I would recommend sub-contracting the extension to the NZ Treasury.
BUSINESS’S GET-OUT-OF-JAIL CARD
There are three things to be said about the Government’s ‘get-out-of-jail’ card on profit forecasts.
It makes the greatest and simplest common sense. It’s arguably completely unnecessary. It rips the cover off the utter stupidity of these so-called “continuous disclosure requirements”.
The common sense. We are living through completely unprecedented times. The idea that anyone could make any sensible forecast of what their trading conditions will be through the next six or 12 months is just completely absurd.
So it would be utterly absurd for companies, their directors and managements, to be held liable for things they said about the company’s prospects by bottom-feeding vultures that tried to sue them.
Unless they made the statements – as the ‘get-out-jail-card’ is qualified – with “knowledge, recklessness or negligence with respect to updates on price sensitive information to the market”.
That qualification seems fair enough. But having said that, there is much – perhaps too much – room for legal argument over the meaning of those words.
The unnecessary. Surely companies can just stop trying to forecast the unforecastable. Arguably, a company only has itself to blame if it tries to make too specific forecasts: that’s almost by definition reckless or negligent.
The utter stupidity. We have erected this massive regulatory structure around supposed continuous disclosure which promotes at the same time absurd over-delivery of less than useful information, but also enables companies to slither out of keeping shareholders and investors properly and fully informed.