In finance, a hollow log is a fund or account that is sometimes kept secret using special ways to record money. It is used to store assets safely for later use. The term can describe actions that are either legal or illegal, depending on the situation.

History

The term was created in 1977 by David Hill, who was a key member of the "Ministerial Advisory Unit" in Premier Neville Wran's government. When the Wran Government took office in September 1976, the state was facing a large amount of debt. Hill found money that had been hidden in accounts held by public departments, such as the Electricity Commission and the Sydney Water Board. These funds were not reported on the departments' balance sheets, which was against the rules for public companies. In the first 18 months, the MAU found $180 million that had been secretly stored. Premier Wran required the departments to use these hidden funds before receiving additional tax money. Finding this money helped the government fix the state's financial problems without raising taxes.

Examples

• In 2002, the New South Wales treasurer, Michael Egan, was charged by some experts with using a "hollow log" method to make the state government's budget surplus appear smaller. This was believed to be done to reduce the amount of money the Liberal opposition could promise to spend before the 2003 election.
• In 2004, the Federal Liberal government found $800 million in unclaimed superannuation money from overseas workers who had visited Australia.
• Before the 2010 Australian federal election, the Liberal Opposition used $2.5 billion from the budget's contingency reserve. This action led to claims that it was an example of "hollow log" tactics.
• In 2012, the Federal Labor government changed the law to allow access to unclaimed money in superannuation, bank, or insurance accounts.
• Before the 2015 Queensland state election, the current Liberal government discovered over $1.3 billion in additional funds and used this money to support its election promises. Labor's Shadow Treasurer, Curtis Pitt, accused the government of using a "hollow log" strategy.