Journalists are very good at challenging politicians’ evasive answers, but they often let people get away with silly numbers. Two Australian examples caught my eye recently, and made me stroppy.

First, an article in our local newspaper (the Advertiser, which has the distinction of being Rupert Murdoch’s first newspaper) quoted the Civil Contractors Federation (an industry lobby group) as claiming that SA Water could be sold for $13 billion. The story was also reported by the ABC and other news media.

SA Water is South Australia’s water supply and sewerage utility, still publicly owned. A private owner would require at least a 7% annual return on a long-term investment, so a valuation of $13 billion implies an annual net profit in excess of $900 millon.  SA Water’s total revenue in 2013-14 was $1,100 million.  The numbers just don’t stack up.

Second, ACOSS has put out a press release claiming that if the rate of GST (goods and services tax = value added tax) were increased from 10% to 15% low-income households would pay 7% more for the goods and services they buy*. Even if a poor household bought only goods and services that were subject to GST** the maximum increase would be (1.15/1.10) – 1 = 4.5%.  So ACOSS’s claim of 7% makes no sense.  But no-one has challenged them.

Footnotes

* Quotation from ACOSS press release: “An increase in the GST has a much bigger impact on low and modest income households because they spend more of their overall income to meet their living costs, in comparison to people on higher incomes who are better able to save. An increase in the rate of the GST to 15% would require people in the lowest 20% of the income brackets to pay 7% more, people in the middle 20% 4.2% more, and people in the highest 20% income bracket just 3% more of their income.”

** That would mean no purchases of basic foods, medicines, medical services, water bills, educational services, childcare and other exemptions.  See here for the GST-free list.