August 24, 2013
The Coalition’s coyness over costings for its policies adds to the poverty of the campaign
A declaration of intent is barely a policy unless backed by details on how it can be achieved
The ghosts of the 2010 election have returned to haunt this one as Tony Abbott fends off doubts over his ability to pay for his promises.
Abbott and his economic team assure the electorate that every one of their commitments is “fully costed” but make no effort to offer proof, blithely hoping they will be taken on trust.
The flaw in their approach is that anyone who remembers the Coalition’s costings debacle after the previous election campaign would know that taking them on trust is a dangerous game.
One of the big lies of the campaign is Kevin Rudd’s claim that Abbott is plotting $70 billion in spending cuts to balance the books if he wins on September 7.
The claim is demonstrably wrong, based on several expert dissections of Coalition promises, and yet highlights one of Abbott’s misjudgments.
Reluctant to tell voters about the savings needed to fund his proposals, the Opposition Leader is hiding the full impact of his policies.
Abbott’s claim yesterday that he has been releasing “interim costings” over the past few weeks is an admission he is holding back on the final bill.
The reason is a matter of history. Abbott and his colleagues were badly wounded three years ago when $10.6bn of their savings measures were rejected by Treasury and Finance officials in the middle of talks with independent MPs to form government.
It is often forgotten that the Coalition still ended up with a bottom-line saving of $863 million, far bigger than Labor’s $106m. Yet the scars from the experience are so raw that the Coalition economic team is keeping this year’s cost estimates to itself.
The result is an information vacuum that independent experts try to fill, putting the Coalition on the defensive.
Headlines about $30bn in Coalition cuts, based on work by Saul Eslake at Bank of AmericaMerrill Lynch, probably overstate the task but are the inevitable result of the Coalition’s political strategy.
The fact is the Coalition’s dance of the seven veils is emblematic of a wider coyness, if not cowardice, in the campaign.
Neither leader is being candid enough about the actual hard decisions ahead, even as both talk of their willingness to make hard decisions.
As The Australian reported last Wednesday, both major parties are committing to long-term spending programs out to 2020 while making inadequate short-term savings.
In contrast to the political rhetoric about budget restraint, Abbott’s spending plans over the four years to 2020 exceed Rudd’s: $88.7bn to $56.4bn.
Promises are easy to make but hard to fund, especially now tax revenue grows too slowly to cover old plans, let alone new ones.
A declaration of intent is barely a policy unless backed by details on how it can be achieved.
One week after Abbott released a paid parental leave policy costing $5.5bn a year, voters cannot be sure about how it is funded. Earlier this year he said it would be “fully funded” by a levy; now it appears it is half-funded by the levy, but the estimates cannot be verified.
Three weeks after the Coalition said it would send asylum-seekers to Nauru, the only guide to the cost is an informal and optimistic $50m estimate.
The company tax cut promised for the next term of parliament is likely to cost $2.5bn a year, but the supporting analysis is yet to be released.
Abbott’s list of road projects, crucial to some marginal electorates, adds up to $17bn, with little information on when the money would be spent.
The Opposition Leader has a long list of savings. Unfortunately, various Coalition sources have put different figures to each item, even as they agree the list adds up to $17bn.
The message from the Coalition’s Treasury spokesman Joe Hockey is that the details are secondary.
“I just say to you, if the whole election is going to be about costings rather than about policies like we are announcing today, then I think everyone is going to bore the Australian people to death and we don’t want to do that,” he said last week.
“We want them to be excited about the policy initiatives.
“But believe me, all of our policies and all of the costings and the ways we are going to pay for it, all of it is going to be out there, verified and in net terms, provided to the Australian people before polling day.” The latest indication from Coalition MPs is that the costings will be released early in the final week of the campaign.
There are suspicions, though, that the details will not come out until the Wednesday before the election, when an advertising blackout begins, to avoid a widespread Labor campaign about any spending cuts.
Labor has also fallen short.
Alarm bells rang when Rudd announced a plan to cut the company tax rate in the Northern Territory from 30c to 20c in the dollar without putting a cost to the idea.
The tax break was touched on briefly in a two-page press release and Rudd sent mixed signals about how big the cut would be when he spoke about the policy at a press conference in Darwin.
Because the cut would commence in about 2018 — a point that only became apparent as the press conference went on — it does not need to be costed. The four years of the budget estimates run to 2016-17.
Even so, the lack of detail was telling. Just as Labor tries to paint the Coalition as untrustworthy on costings, it has unveiled ideas of its own that it cannot explain.
This does not mean all the complaints against Labor make sense.
The Coalition is at its weakest in the funding debate when it claims Labor is failing because it has not lodged enough plans with Treasury.
Although it is true Labor has lodged only a paltry list of policies at the electioncostings.gov.au website, that is because every significant Labor policy put to the electorate so far has already been costed and included in the budget update issued on August 2.
So far, however, Labor is yet to issue the daily policy update that came from Wayne Swan during the 2010 campaign, including a cost for each promise and a savings measure to match it.
Policy fights are always tilted against the opposition. Governments have the full resources of the Treasury and Finance departments to draft their plans, while oppositions have to find ways of levelling the playing field.
It is true, as Hockey points out, that in 2007 Labor did not reveal its policy details until the last day of the election campaign. The rush of detail was so great, in fact, that Treasury said it did not have time to analyse some of the ideas and they went uncosted.
On the Wednesday before voting day six years ago, for example, George Megalogenis in these pages took Labor to task for issuing “two bullet points and a billow of smoke” when claiming $5.6bn in savings.
Swan did not bother to provide subtotals to show what the savings were actually for.
In this election, however, the opposition has more resources than ever. For a start, it could call on Treasury and Finance during the election campaign to put a cost on any proposal, although it is avoiding this because anything submitted must be publicly released.
Hockey’s real advantage in this campaign is his ability to call on the Parliamentary Budget Office. An independent agency of federal parliament, the PBO was set up only during the last term of government and is now in its first campaign.
Any policy lodged with the PBO before the election campaign is kept confidential; it is up to the political party to decide when to release it.
Those rules changed once the campaign got under way, so any request to the PBO since August 5 has been posted on its site.
Seeking to keep control of the timing of any release, the Coalition lodged 200 policies with the PBO before the campaign. It is yet to show voters a single one.
The result is an absurd campaign debate.
Claims about Abbott’s parental leave policy are put to the test by citing the PBO’s analysis of a similar proposal from Greens leader Christine Milne, while the costing of the Coalition plan is sitting in a drawer, waiting to be released.
Accusations of a $70bn “black hole” in the Coalition platform are backed up with a Labor document full of holes, which is dismissed by independent sites such as PolitiFact but used by Rudd anyway to score points.
Abbott and Hockey could end the sham debate by being more honest with the electorate about the details of their policies as each one is announced. Three weeks into the campaign, however, they are sticking to a strategy of withholding the information until the last moment.
If they honour their promise to release the costings “in good time” before the election, the result is likely to be a dump of hundreds of revenue and spending changes in one day, making it harder for voters to evaluate the particular changes that affect them most.
All this comes at a time when former political leaders — the only ones who risk being frank — warn about the dumbing-down of the national debate.
The head of the Committee for Economic Development of Australia, Stephen Martin, a former Labor parliamentary secretary and Speaker of the lower house, dismisses the “10- second media grabs” of the campaign.
A report from CEDA issued last Tuesday contained interviews with Bob Hawke, Nick Greiner, Steve Bracks, Jeff Kennett and others complaining of the poor quality of public policy debate.
“I think there is an increasing tendency to, if not be governed, certainly to be influenced in approaches by opinion polls. And I find this basically repugnant because leadership is about leading, not following,” Hawke told CEDA.
That is a rebuke to leaders such as Rudd and Abbott as they praise the Hawke era of policy reform in the hope of convincing voters they can match its achievements.
What is most disheartening about this year’s tactics is the leap backwards for voters.
During the 1996 campaign, Peter Costello issued regular updates of the Coalition’s promises, offering line-by-line accounts for costs and savings.
By 2007 the approach had degenerated into a bidding war without detail. Even as Rudd declared the “reckless spending must stop”, he kept making promises without proving he could pay for them.
Now it has deteriorated to the point where the opposition leaves voters in the dark.
The case of the missing costings The Coalition’s unanswered questions on:
- CARBON TAX: What savings will make up for the loss of carbon-price revenue, assuming change from July 2014? Possible cost: $9.5bn
- FRINGE BENEFITS TAX: What savings will make up for the Coalition’s rejection of Labor’s FBT hike? Possible cost: $1.8bn
- PAID PARENTAL LEAVE: Will Tony Abbott’s scheme be “fully funded”, as he claims? How much is each saving? Possible cost: $6.1bn
- COMPANY LEVY: How much is raised by denying shareholders their franking credits on the paid parental leave levy? Possible saving: $1.6bn
- INFRASTRUCTURE: What is the timeframe for spending on roads? Possible cost: $17bn
- EXEMPTIONS: Are health, education and defence fully exempt from cuts? Does this extend to social welfare? Possible cost or saving not available
- ASYLUM-SEEKERS: What is the full cost of the Coalition’s border protection policies, including building on Nauru? Possible cost or saving not available
- MINING TAX: Will the Coalition save enough by ending the mining tax package from July 2014? Possible cost: $4.7bn
Courtesy of The Australian
FRINGE BENEFITS TAX: What savings will make up for the Coalition’s rejection of Labor’s FBT hike? Possible cost: $1.8bn PAID PARENTAL LEAVE: Will Tony Abbott’s scheme be “fully funded”, as he claims? How much is each saving? Possible cost: $6.1bn COMPANY LEVY: How much is raised by denying shareholders their franking credits on the paid parental leave levy? Possible saving: $1.6bn INFRASTRUCTURE: What is the timeframe for spending on roads? Possible cost: $17bn EXEMPTIONS: Are health, education and defence fully exempt from cuts? Does this extend to social welfare? Possible cost or saving not available ASYLUM-SEEKERS: What is the full cost of the Coalition’s border protection policies, including building on Nauru? Possible cost or saving not available MINING TAX: Will the Coalition save enough by ending the mining tax package from July 2014? Possible cost: $4.7bn