Peter Costello nicely stitched up Wayne Swan in his Fairfax column this morning, pointing out how Labor has squandered the best terms of trade in generations.

However, Costello was also typically sneaky with the description of his own record when he wrote the following about the federal financial position five years ago:

“The federal government was running budget surpluses. It had paid off its debt so it established a sovereign wealth fund — the Future Fund — to save for the future. This was to prepare for a time when things were more normal and to cover the costs of the ageing population. About $60 billion was deposited into it.”

If the Howard government had really “paid off” all of Labor’s debt, then what on earth were the $58 billion of Federal government bonds on issue when Kevin Rudd came to power in November 2007?

Sure, the home page of the federal borrowing authority now reveals it is up to $189.84 billion, but Labor didn’t start with no debt.

Costello’s description of the Future Fund as “a sovereign wealth fund” is also completely misleading because it is nothing more than a half-funded superannuation scheme for current and past federal public servants, as Crikey has regularly pointed out over the years.

And it was Costello who recklessly allowed unfunded Commonwealth public section superannuation liabilities to blow out by $29 billion to $98 billion over his first 10 budgets before the Future Fund was established.

Costello then did the right thing and pumped in a quickfire $50 billion as the commodities boom started to take hold in the final two years of the Howard-Costello years.

It didn’t take Labor long to squander the surplus and simultaneously end additional contributions to the Future Fund, which will now take decades to be fully funded, rather than 2020 as the first Swan budget claimed.

Contrast all this with what the Victorian local government sector has been through over the past few months.

Vision Super, which handles the superannuation of all current and past council workers, slapped Victoria’s 79 councils with a $71 million bill earlier this year to top up the defined benefit elements of the liability.

Darebin, an inner-city council led by mayor Diana Asmar, who is married to a Stephen Conroy staffer, was hit with a $2.7 million bill and paid in cash on March 31. This hit will be fully reflected in Darebin’s 2010-11 budget outcome and the 2011-12 budget.

Indeed, many Victorian councils are jacking up rates by more than they had planned because of the $71 million cash slug to maintain fully funded super schemes.

Manningham City Council is having a special meeting of council tonight to approve the 2011-12 budget and our first ever 10-year financial plan. The officers have proposed a 5% rate rise and this is expected to be approved, even though the past two years have both been lower at 3.7% and 4.8% respectively.

The superannuation slug was the final straw that saw a majority of councillors move back to the long-term plan of compounding 5% rate rises.

The Manningham budget reveals a total provision for the super blowout of $2.5 million, comprising $1.34 million in 2010-11 and $1.14 million in 2011-12.

Even after this slug, Manningham remains completely debt free with $50 million of cash in the bank, although some of this is restricted cash for liabilities such as nursing home bonds and long-service leave.

But none of that cash includes funds set aside for superannuation, as this is handled off balance sheet by Vision Super. In other words, Manningham really does have no debt and a net cash position after considering all liabilities, unlike the Commonwealth during the Costello years.

Contrast that with Peter Costello and Wayne Swan who, for all but two of the 14 budgets between them, have failed to properly fund ballooning liabilities for public sector superannuation, the majority of which relates to ridiculously generous defined benefit pensions for the military.

In the case of Costello, he has even erroneously claimed that the inadequate funds that have been set aside for military pensions are somehow equivalent to a sovereign wealth fund like those run by genuine saving countries such as Norway and Singapore.

The very simple question for Peter Costello and Wayne Swan goes as follows: if Victorian councils are forced to fully fund defined benefit blowouts as soon as any shortfall is identified, why not the Commonwealth and why not states like NSW and Victoria which together have more than $40 billion in unfunded super liabilities?

Stephen Mayne is a Manningham City councillor who receives no superannuation from council and was not paid for this contribution.