Only Cookie Monster could make this big a mistake

Sesame St character the Cookie Monster.

The Morrison government is brought to you today by the number 60 billion.

The Sesame Street allusion is apt. Sesame Street’s resident mathematician, Count von Count, would be struggling to understand how a program that Treasury forecast would cost $130 billion, had its cost amended to $70 billion, leaving an underspend of $60 billion. And as far as I can tell he can only count to 100.

This is the greatest underspend in Australian history. Nothing comes close and probably won’t in a lifetime. The government’s tweakers decided to put a brave face on it and spoke of savings but only managed to unleash every lobby group with a gleam in their eye and a list of expensive demands. One poor, deluded soul declared that if the underspend was spent on the ABC, the national broadcaster could be kept fully funded until 2074.

Sesame Street character Count von Count would struggle to explain the underspend.

The $60 billion doesn’t exist. You can’t go to a room in the Treasury building and find it stacked up to the ceiling in used notes. It would have had to come from borrowings. So, as the PM said, it is something of a relief not to hit the Shylocks for it. Commonwealth borrowings are virtually interest free at the moment but the principal would have to be repaid at some point. And 60 billion is a big chunk of change, about 12 per cent of government revenue on pre-pandemic budget figures.

The lesson here is not about invisible money and whether it was spent or what it can be spent on. The take home message is that Treasury in cahoots with the Australian Taxation Office came up with a forecast in March and then stubbornly stuck to it in the face of looming evidence to the contrary.

During a twilight presser in Canberra on May 15, Prime Minister Scott Morrison told the nation there were 6,134,874 Australians currently receiving support on the JobKeeper program. The same figure had been cited in its entirety and abbreviated form on a number of occasions by the Treasurer, Josh Frydenberg.

When I heard that number fall from Scott Morrison’s lips, the very first thing I thought of was

“that doesn’t sound right.” I broadly understood the national workforce is around 13 million. A quick check of the Australian Bureau of Statistics put the figure at 13.2 million. That’s the number of Australians who were in work pre-pandemic.

According to the government, 46 per cent of the workforce was receiving support from Job Keeper as of the Ides of May.

I tweeted up that six million-and-change figure and a handful of people came back to me expressing doubt. The question is, if they could spot the glaring error, why did no one from Treasury or in Employment or in Finance or indeed in the PMO pick it up?

Perhaps I should get a job in Treasury because I didn’t think anymore of it. But a back of the beer coaster calculation shows it could not have happened with the circumstances that prevailed in April.

Let’s start with the number of people on JobSeeker, the more nuanced, fit for kinder, gentler coronavirus times than in days of plenty when we called it the rock and roll. The official figure is 6.8 per cent unemployed but that is a smoke and mirrors exercise designed not to frighten the horses.

The real figure is closer to 16 per cent and probably a point or two higher of people who are currently receiving the Job Seeker benefit and who, for whatever reason, cannot or do not receive the Job Keeper payment.

Twenty eight per cent of the workforce are public servants, either earning a salary from the states or the Commonwealth. They have continued to work.

Around 3.15 million Australian workers were declared essential in March, among them registered nurses (220,000), warehouse store persons and shelf fillers (210,000), truck drivers and couriers (150,000), child carers (140,000), primary school teachers (137,000), aged and disability care workers (128,000), secondary school teachers (128,000), commercial cleaners (126,000), farmers (66,000), doctors (54,000), police (52,000), bank workers (48,000).

Reports around the time suggested that amounted to 30 per cent of the workforce but on my numbers it is a little less — 24 per cent of the total workforce.

Now we need to do a bit of scratching away on the bar coaster because obviously many of these essential workers are also public servants. I’m going to halve the total number of public servants and come up with a figure of 13 per cent for non-essential public servants.

Construction workers who were also deemed essential make up a further nine per cent of the workforce.

Thirteen (est. number of non-essential public servants) plus 16 (real unemployment figure) plus 24 (number of essential workers) plus nine (number of construction workers considered essential) and Count von Count tells us the answer is the number 62.

Sixty two plus 46 (the number Treasury assumed was receiving Job Keeper) gives you a grand total of 108. One hundred eight per cent of the Australian workforce.

And because we are running out of room on the coaster, I’m not bothering to count those non-essential workers toiling away industriously from home or at their places of business while we speak. There are millions of them.

Can we have 108 per cent of the workforce? Count von Count says no. Even Animal from the Muppet Babies knows that.

But it gets worse. We were told that more than 728,000 businesses have signed up for JobKeeper. We were told further that approximately 1000 companies made data entry errors claiming salary rather than recipients e.g. Instead of listing the 10 workers to receive JobKeeper, the registered business entered 15,000 which was the amount of folding stuff the Commonwealth would have to shell out in support for those workers every fortnight.

This, the government and bureaucracy says, is the reason for the erroneous although seemingly precise figure of 6,134,874 when it is really about half that. The crucial figure here is Treasury had data suggesting 0.14% of registered businesses were claiming 46% of the money.

And until last Friday, no one noticed.

There are more than 20 people working in Treasury who earn more than a quarter of a million dollars a year. Nice work if you can get it with no apparent basic skills in arithmetic required.

We don’t know how Treasury came up with the $130 billion dollar bill for JobKeeper either. That is, they’re not saying. It may have been based on an estimate of a contraction in the Australian economy of around 24 per cent in the June quarter, in dollar terms a $120 billion blow to the national economy with a resultant loss of around half of the workforce in the event of a nationwide Spanish-style lockdown. I don’t think even a dyed-in-the-fluff pessimist like Mr Snuffleupagas would have considered that likely.

These are extraordinary times and obviously the government wants to move quickly on from this embarrassment. It highlights the shortcomings of cabinet government having its lunch cut by the specially convened National Cabinet consisting of the Prime Minister, premiers and chief ministers from the states and territories. Oversight seems to have been defenestrated.

Costings may not be scrawled on the back of a bar coaster but it might be better if they were. This balls up would not have passed muster on Sesame Street.

The bigger problem is the bureaucracy, yes, the much blighted folk who wander the cafes and restaurants in Canberra on a sunny day, sweeping the clouds away, on their way to where the air is sweet, have made a monstrous mistake, the sort only Cookie Monster could make and only then if he ate a $60 billion cookie.