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Budget "misleading" and "unconvincing"

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A leading economist has branded Labor’s 2014 state budget a fraud that features misleading debt figures and unconvincing economic forecasts.

University of South Australia’s Dick Blandy lashed out at the budget on ABC radio this morning, confirming he had told Treasury officials in last Thursday’s briefing that the document was a fraud.

He echoed analysis by Indaily in December last year that the State Government’s estimates of economic growth aren’t supported by official Australian Bureau of Statistics figures.

“This is a fraud,” Blandy told Treasury officials last week.

“The document is not very convincing in its estimates of our economic progress,” he told 891ABC radio today when asked about his outburst.

“It forecasts growth rate of 1.75 per cent in Gross State Product while also recognising a fall in employment.

“This means that labour productivity will have to rise three per cent for the GSP figure to be realised.

“There is no explanation how this surge in productivity (will occur).

“There is no discussion of what will drive the economy.

“There is no evidence for economic change.”

Adjunct Professor Blandy then turned his attention to debt estimates and what he called an accounting “illusion”.

“It predicts a fall in debt for 2016-17,” he explained.

“But in 2016-17 $2.7 billion in debt is shifted from the State Government column to the SA Water column.

“If you add that back in, debt has actually risen in that year,” he said.

“The impression is given that debt falls, but in fact if you add in the book entry transfer, it increases.

“I thought that was a bit misleading.”

Blandy’s assessment of Treasury estimates follows last December’s rapid evaporation of forecasts in the Mid Year Budget Review.

On that occasion, the estimates of economic improvement lasted less than one day.

The MYBR document had estimated annual growth of 2.25 per cent for the 2013-14 financial year, up on the 2012-13 year where an annual growth rate of just 0.8 per cent was recorded.

The following day ABS figures showed South Australia’s struggling economy retreating by -0.5 per cent, the fourth negative result from the last six quarters.

Last week’s Budget has admitted the error of December and adjusted its State Final Demand figure for 2013-14 to just one per cent.

For Dick Blandy that’s not far enough.

“It should be zero; and it should be zero for the following year.”

Blandy’s assessment follows similar concerns expressed by Adelaide University economist Michael O’Neil over the last two years that Treasury estimates of economic growth aren’t supported by official data.

Last week, O’Neil told InDaily that there must be some doubt over some of the “optimistic” economic assumptions in the budget, including forecasts for growth in general operating revenue, gross state product and employment.

“There doesn’t seem to be much economic stimulus there, with the hospital spending being deferred,” he said.

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