Page 569 - Week 02 - Wednesday, 24 February 2010
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The cash versus asset bookkeeping argument has been used as a major part of the government’s rationale for the whole deal. The argument is that if the government owns the asset, being the hospital, then it appears on the government’s books and therefore the $77 million required to purchase it would be neutral in terms of accounting.
The argument goes that any additional money invested in the site would appear on the government’s books rather than the Little Company of Mary’s and would make the books look better in about 20 years and that they must move those assets to the balance sheet before making any additional investment in the hospital. This is the point where Ms Porter is saying, “We do not want the additional money spent on Calvary. We would not invest in Calvary.” That is simply not true.
The minister’s argument has not received support from anyone. She commissioned a review by Ernst & Young, but the terms of reference were extremely limited and the report was not an endorsement of her policy position. I will quote. Ernst & Young have said there is:
… no assurance over the independent transfer value attributed to Calvary public hospital or the associated accounting treatment.
They further state:
… key elements of the data and assumptions are based on information received from ACT Health and not validated by Treasury. We have not checked the validity of this source data with ACT Health, nor have we undertaken an audit or validation of the data.
That is all they got with the money that they paid for. It is damning. That was the best the minister could come up with after 18 months, and she had to pay for it.
The respected RMIT economist Professor Sinclair Davidson described the government’s budgetary arguments as “simply nonsense”. And he described the Treasury analysis as “the snow-job the ACT government is pulling over the numbers”. His assessment is that, rather than supporting the government’s case, “the ACT Treasury analysis shows that cost-effective manner to be the maintenance of the status quo”.
Terry Dwyer, an economist with a PhD from Harvard, has made damning analysis of the government’s financial arguments in his Calvary consultation submission. He makes the case that:
The accounting “analysis” has nothing to do with the real economic cost to the community—which is the cash cost.
He says:
It does not matter who owns the assets so long as they are used for health care in the ACT …
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