Dodgy accounting by dodgy ministers ignoring Treasury advice

Steve Joyce must be grinning from ear to ear as Grant Robertson’s dodgy accounting deals are being exposed. Quote:

The Government allowed Housing New Zealand to borrow billions of dollars to build new state houses despite advice from Treasury that such debt would be expensive and risky.

In May, the Government announced it would be building 6400 new state homes over four years.

The funding for this came principally from $2.9b Housing New Zealand was allowed to borrow independently, instead of through regular Government borrowing. Just $234m of new money was allocated to the crown agency.

Documents released by Treasury on Thursday reveal the agency repeatedly warned the Government against allowing HNZ to borrow money this way in the lead-up to the Budget, suggesting instead that the money should come out of normal Crown debt.

This money would have likely come with cheaper interest rates but would vastly increase the amount of core crown debt. That would?likely stop?the Government achieve its key Budget Responsibility Rules target of getting core?crown debt below 20 per cent of GDP in five years.?End quote.

This is what happens when you have commercial morons in charge of the cheque book.?Quote:

In a February?briefing, Treasury analysts wrote that borrowing directly through the crown would save $11 million?per year. This was based on a plan to borrow $1.75b instead of $2.9b. A later analysis estimated an additional?$3m-$6m in annual interest costs for every $1b borrowed by Housing New Zealand.?End quote.

So, the government ignored Treasury advice and now taxpayers are paying an additional $3m-$6m in interest because they didn’t want to appear to blow out crown accounts. There is a word for that sort of accounting misfeasance.?Quote:

In essence, overseas credit rating agencies would not see this debt as separate from Crown debt given the agency delivered such a core service, and thus would just factor it into their decisions about New Zealand anyway.

Because of this it risked the credibility?of the Government’s Budget Responsibility Rules – as it was essentially a loophole through them.

“Decentralised borrowing could undermine the fiscal management approach, weakening fiscal control, the ability to manage total levels of debt to prudent levels, the prioritisation process that the Budget applies to spending proposals and the credibility of the fiscal strategy,” the analysts wrote.?End quote.

But the government did it anyway. It shows a callous disregard to the law and the rules.?Quote:

A spokeswoman for Finance Minister Grant Robertson responded: “This Coalition Government receives a range of advice, including from the Treasury. We consider it all and make our decisions based on our policy agenda and priorities.” End quote.

I reckon Grant Robertson has been getting more advice from his Dad about creative accounting practices than Treasury. It is clear the apple doesn’t fall far from the tree.