While the Government is keen to demonstrate it must carry out its planned path of stimulus spending, there’s a lot of grumbling about an apparent spending freeze the Prime Minister has put on the public service.

In an effort to cut down on spending post-stimulus the Rudd Government has practically put a complete stop to any new funding for programs not already budgeted for.
The Punch has learnt that any Minister or their department wishing to get extra funding now needs to go through the Prime Minister’s Office - and the answer there is going to be no.
Several Government sources have told The Punch approval for any new spending had been all but frozen with Finance’s Expenditure Review Council (ERC), under instruction from the Office of the Prime Minister, rejecting any new spending applications.
Deputy Prime Minister Julia Gillard is currently waiting on an extra $50 million she has been lobbying for, for the migrant workers’ Language, Literacy and Numeracy Program. But even with Gillard’s clout it appears unlikely she’ll get it.
It is understood one of the few exceptions the Prime Minister’s office has made to the freeze, introduced shortly after the May budget, have been extra funding for the Health Department to combat swine flu.
When The Punch put the question as to whether there had been a funding freeze we got this response from the Prime Minister’s office.
“The Government’s rules relating to new expenditure and to fiscal policy have not changed”.
This was followed by a page of already stated budged positions on fiscal policy and how the Government would get back into surplus post-stimulus.
This is a strange kind of response which doesn’t answer the question.
Firstly it doesn’t say whether those rules include a funding freeze or not; and secondly ignores the fact that the rules allow the Prime Minister to have the final say when it comes to ERC decisions.
So the rules are if Kevin Rudd’s office wants to reject extra funding applications it can.
Of course it’s logical that the Government would want to save money at the moment after the $80 billion odd dished out in total stimulus spending since last year.
A leaked Treasury brief recommending the Government continue with the stimulus spending combined with the Treasurer’s own words words indicate a Government that’s determined to stick to the line that all the stimulus spending was necessary.
Besides being an admission that it used too much ammunition to stop what is turning out to be a lesser economic downturn than first thought, it would be hard for the Government to cut back on stimulus spending even if it wanted to.
As Access Economics’ Chris Richardson put it yesterday it would be like unscrambling an omelette.
Joe Hockey has appealed to Kevin Rudd to stop being Santa Claus and start being the Grinch.
Ironically by demanding a funding freeze on public spending the Prime Minister is showing his willingness to be the Grinch, but is evidently fearful about crowing about it as would attract too much attention to the fact that they have absolutely no money left and are already being so tight.
It is a problem that’s only going to get worse for the Government over time as they attempt to scrimp, while the wails of those with begging bowls will only get louder.
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