From Peter Martin this morning comes the latest Joe Hockey “brain fart”: his plan to sell-off prime federal government buildings in order to improve the Budget in the short-term, only to then rent them back off the new owner:
Hockey and Co are investigating selling irreplaceable real estate. They’ve contracted PricewaterhouseCoopers to investigate selling the parliamentary triangle buildings that house the Treasury and Finance departments as well as the historic East Block and West Block buildings either side of the old Parliament House and the Anzac Park East and West buildings that flank the view of the War Memorial from Lake Burley Griffin.
Once sold, they would be leased back to the departments of Treasury and Finance and whoever needed to use them. For the next four years (as far out as the budget’s detailed forecasts go), Hockey’s accounts would look good. He would have raised serious money. Beyond that, his successors would be paying out serious rent.
The Howard government sold the purpose-built Foreign Affairs headquarters to the to the Motor Traders’ Association super fund for $217 million in 1998. By 2017 it will have paid out $311 million in rent. Foreign Affairs can’t move out, and what dressed up the budget nicely in 1998 will cost $20 million or more per year in rent forevermore.
As Martin correctly points out, the Abbott Government clearly now only cares about the next election, for if it cared about long-term budget sustainability, there is no way that it would embark on such fiscal sabotage.
But let’s be honest, similar criticism can be aimed at the Abbott Government’s privatisation agenda, whereby through its “asset recycling” program it is encouraging states and territories to sell-off publicly owned assets without due regard to longer-term consequences.
As warned in the Productivity Commission’s report on the provision of public infrastructure, released last year, asset recycling “could act to encourage privatisation in circumstances that are not fully justified and encourage the selection of new projects that do not have demonstrable net benefits”.
Australia needs long-term, structural, solutions to its Budget ills, not gimmicks and sugar hits aimed purely at the forward estimates (and the next election) that cost taxpayers dearly over the longer-term.
