Fairfax fails to grasp depreciation, and the facts

Dictionary.com defines depreciation as:


1. decrease in value due to wear and tear, decay, decline in price, etc.
2. such a decrease as allowed in computing the value of property for tax purposes.
3. a decrease in the purchasing or exchange value of money.
4. a lowering in estimation.

Another financial term that crops up in annual reports is impairment. I like this definition of that term:

Weakening, damage, or deterioration, especially as a result of injury or disease.

The diseased and deteriorating thing in this case is the SMH, and in particular, the credibility of Josephine Tovey. She penned this masterpiece on Friday:

Water waste of money: riot squad's unused white elephant cops a spray

From the story:


THE state's $700,000 water cannon is rapidly depreciating in value and has still never been used, new figures show.


The four-year-old device, a large black truck that can carry 12,000 litres of water which it fires from its roof, is depreciating at 10 per cent a year, according to figures provided by the Police Minister, Mike Gallacher, in response to budget estimates questions on notice from the Greens.


The government spends $3000 a year on servicing its water nozzles and pumps and on mechanical maintenance.

Interestingly, a glance at the website of David Shoebridge, the Greens MP who questioned these expenses, reveals this press release from the same day, 2 December 2011:

“Questions on notice asked of the Police Minister by NSW Greens MP David Shoebridge during recent budget estimates hearings have revealed that hundreds of thousands of dollars are spent on just depreciation and maintenance costs for a rarely used multi-million dollar Police boat – the Nemesis – and the never-used water cannon.

These two white elephants were purchased at a cost of $12 million to the NSW public. They are rarely, if ever, used and ongoing maintenance costs and depreciation continue to mount,” Mr Shoebridge said.

“This money would have been better spent ensuring the financial viability of the serving officers’ death and disability scheme.

“Fancy boats and high powered water cannons might look good in a photo with the Minister, but their lack of use shows they have little or no impact on the actual job of policing.

“The water cannon has never been used and the police patrol boat Nemesis is used less than once a fortnight.

“The truth is we do not have a culture that requires a water cannon to maintain public order and the work of the Nemesis can be performed by a far smaller, and cheaper, vessel.

“The Police budget would be better spent ensuring that police have the training they need and the wages and conditions they deserve, than on a few big toys that hardly get taken out of their wrapping,” Mr Shoebridge said.

What I found odd though is that when I went searching for a transcript of the Budget Estimates committee that talked about the water cannon, all I could find was a transcript from the 2010 hearings - 17 Sept 2010 to be exact. I haven't been able to find any questions from Mr Shoebridge regarding the water cannon and police launch in the latest set of hearings, which happened on 27 October 2011.

However, I did find these written responses to the questions that Shoebridge put to the Labor minister back in 2010:

Dave Shoebridge answer 1

Notice the name of the Minister for Police - Michael Daley. He was the last Labor Minister for Police. He was replaced by Mike Gallacher when the Liberals took office in March 2011. Note the date at the top too - 17 Sept 2010. And note the cost of the water cannon - $472,291.35. I don't know where Josephine Tovey got the figure of $700,000 from. As the Police Commissioner says in the transcript from the 2010 hearing, " I would not want to mislead you".

David Shoebridge answer 2

Then we have transcript 2 from the same 2010 hearing. Total fuel use was 3479 litres of diesel, and $692 was spent on two batteries. 

Now, perhaps there are more recent papers that aren't showing up during Google searches, or documents that have not gone on line yet so we're not privy to them.

However, based on the two written answers above from 2010, Josephine Tovey is looking like a twat. so much for fact checking at the SMH. Based on what I've found, she got the Minister wrong, the year wrong and all the numbers wrong. And she appears to have no understanding of depreciation - I'll cover that in another post to stop this one getting too long and boring.

What I think she's done is found a Greens press release, dug up a few numbers and run with it without questioning anything the Greens had put up. Typical - the Greens get a free pass and no investigation. She of course hasn't mentioned that Shoebridge appears to have it in for the cops - he was hauled up by the Privileges Committee recently for saying some nasty things about the Commissioner (who has been given a right of reply).