Sorry about the mixed metaphors.There is little doubt that Rudd’s ‘$10 billion black hole’ claim has not been knockout blow he was looking for and most of the media are seeing it as a sign that the election contest is all over – Labor has destroyed its own credibility.
Tim Colebatch gives a simple story of what happened. Bowen, Wong and Rudd dug out some old costings done months ago by Treasury and Finance on the basis of the Government’s account of what LNP policies were. They were not costings of LNP policies, with the assumptions and specifications supplied by the LNP.
Did Labor seek to lie or mislead? Take a look at what Bowen and Albanese said in this piece:
“In the press conference we said that we asked the Treasury and department of finance to cost these things before the election. We said that. But we also said that assumptions can change the costings. We said that,” Mr Bowen said.
The Treasurer said the two department secretaries had simply affirmed that Labor had asked the departments to cost the policies before the election.
What Rudd, Bowen and Wong offered was information which was not represented as anything other than it was in strict terms. But Rudd’s hyperbolic language certainly over-hyped the significance of the information.
In this piece you have Rudd’s claim that “fraud” is being perpetrated on the Australian people. Strong language. Certainly the LNP is going to great lengths to avoid scrutiny. But what Labor served up was not “crap” as alleged by the intemperate Neil Mitchell. As Shorten, Bowen and all have been saying, all the LNP needs to do is to release their full costings with assumptions.
In this piece ABS economics correspondent Stephen Long sees the whole thing differently:
David I think that by and large the press gallery has got this wrong. They’ve interpreted the statement from Finance and Treasury yesterday as saying the numbers that the Government released weren’t credible.
I see it differently, I think that they were distancing themselves from the politics of this, Treasury and Finance didn’t like being used in this way for political purposes during a campaign. The fact remains that there are costings from Treasury and Finance and the Parliamentary Budget Office now on the public record which are well shy of the costings that the Coalition says that it can make.
The fact remains that there are issues of substance at stake. Long points out that if you cost public service salaries at different levels you get markedly different savings, none of which comes near to the $5.2 nominated by the LNP. Long’s favoured costing yields only $2.8 billion.
The only other journalist to look at substance (surprise, surprise) was Laura Tingle (I think that article is paywalled.) She says the public service savings depend in part as to how the LNP would go about it. Given the savings nominated she says public servants should be very afraid.
Remember also that the 12,000 jobs to go comes on top of Labor’s cuts, which are at least 4000.
She also points out that more than half the amount in question relates to
the Jobs and Competitiveness Fund and from discontinuing the Clean Energy Finance Corporation which together account for $6.2 of the $10 billion:
But Labor argues only that the $5.1 billion saving from discontinuing free permits in the Jobs and Competitiveness fund flows from the fact they do not affect the underlying cash balance. That is, they are estimates on a cash basis, not an accruals basis. The Coalition released accruals numbers.
We won’t know until the Coalition releases all its costings – on both an accruals and cash basis – whether there is a shortfall.
That’s not all, but it gives you some idea of the complexity of the real issues, which is why we get from most, as Nicholas Gruen says a “he said, she said” story which concentrates on process and politics.
Tingle explains elsewhere that the main difference between accrual and cash accounting is the timing of when revenue and expenses are recognised. One would assume that Hockey and co have chosen accrual because it is to their advantage.
Tingle also deals with the politics. She says unfortunately Rudd has invested a lot of political capital on this one, and blew it, which will reduce the pressure on Abbott to come clean.
To Geoff Kitney Rudd created a black hole and then got sucked into it. Game over, he says, just as Rudd is going to officially launch the the campaign:
As the polls have got worse, Labor’s desperation has increased. The price of desperation has been an increasingly erratic campaign, confused messages, a swing to populism and now a disastrous over-reach on Coalition costings.
One of the toughest things Rudd will ever have had to do is to officially launch a Labor campaign already dead, one of the final, fatal self-inflicted blows.
Phil Coorey and others tell us it’s all over because of marginal seat polling. Why we should take notice of polling that fluctuates so wildly beats me. Rudd is shown as 57:43 in front in his seat. From memory a week ago he was 48:52 behind.
Alan Mitchell gives a sense of perspective by pointing out that $10 billion over four years is $2.5 billion a year, which is the size of a rounding error. Nevertheless the prevailing orthodoxy is that the numbers do need to add up. In those terms the university cuts were less than a rounding error and the removal of single mothers onto Newstart a fraction of same.
One of the neglected factors is that Labor’s costings are fully accounted for and do add up. They include Gonski and NDIS ten years out and see the debt paid off by 2022. I repeat here the graph from my previous post:
That shows the budget coming back into structural surplus, something no-one seems to want to believe.
I think the biggest dangers of Hockey/Abbott financial management are threefold.
First, their stated intention of reducing the share of government as a proportion of GDP each year inevitably means the people will have to pay more for necessary services. Inequality within our society will grow.
Second, there will be increased privatisation of more areas of life. The audit of public services and expenditure will be used as an excuse to make more public services contestable, as has happened in Queensland.
Third, in the event of a recession, austerity financing has long been espoused by the LNP. Gillard/Swan effectively dealt themselves out of a Keynsesian response. Rudd/Bowen are our best bet.
Then there’s other stuff, like the NBN and the fact that the LNP are not committed to Gonski, just Gonski funding for next year and until they get a chance to change it.