Abbott’s multi-billion dollar black hole
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It costs how much? Costings have once again become a debacle for Tony Abbott, after official Treasury figures found a whopping $7 billion — with talk it could be as high as $10.6 billion — hole in Coalition policies. Despite the “end the waste”, “stop the debt” slogans, the budget would be improved by somewhere between $860 million - $4.5 billion, not the $11.5 billion promised by Abbott. The figures emerged when the three independents gained access to official Treasury costings documents. With the independents noting that the economy and economic management were amongst their key concerns, how will this play out? So far, they seem unimpressed. Tony Windsor told ABC “‘We probably understand now why he wasn’t interested in releasing the numbers and so I think we all await an explanation of where these significant differences are in terms of interpretation.” If you want to do a little compare and contrast for yourself, you can view the Coalition’s costings here [PDF] and Labor’s costings here [PDF]. But is this a vote-changer? Here’s how the pundits reported the news. The Australian Dennis Shanahan and Lanai Vasek: Treasury finds $7bn hole in Tony Abbott’s costings
The Age Michelle Grattan and Carol Nader: $7bn hole in Abbott’s policy costings
Sydney Morning Herald Phillip Coorey: Treasury wipes $10b off Lib costings
Herald Sun Phillip Hudson: $10b Treasury blow to Opposition Leader Tony Abbott
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88 Comments
The Green / Labor alliance was as securer bet as death and taxes. Seeing slimy Swan bow to the independents last week and to Bob Brown yesterday made my skin crawl.
The minority result will be good for Government and process, but if Abbott is PM, Labor will self implode and it will be ugly. They know that and Gillard has approval to do whatever it takes.
It is interesting Rudd is staying low. There can be no effective Government with him the poison / get square man in cabinet.
what was Peter Costello’s comment about Abbott’s economic credentials?
was it something about not being able to trust him with the penny jar?
no, that was the other bloke
remind me again which member of the Opposition was an accountant - was it Joe?
Barnaby? really?
Big blow for the Coalition. You can’t “stop the waste” or “stop the debt” if a) your own economic management is a bit dodgy; and b) you went to great and transparently deceptive lengths to prevent this from becoming publicly known. Unless photos of Gillard eating the babies of aspirational voters appear over the next few days, she’ll probably get the nod from the independents (no matter how much they’re holding their noses. The true test is going to be how well Labor can push their agenda, whilst mollifying the independent’s hobby horses. Mind you, the parliamentary reform hobby horse is one Australia is going to be glad is mollified.
I cannot help but think that there is more to this.
If there was a black hole in the Coalition numbers, but they were still better than Labours figures, why hide them? It doesn’t make sense because no matter how you spin it according to these Treasury run numbers, Australia would have been better off.
I think there is something dodgier still in the Coalition’s Damn Lies and Statistics story. I can not help but think that not all of their election promises were made made public. Possibly more to their agenda than they were prepared to discuss prior to the election?
It’s hilarious to listen to Joe Hockey lying his barge ass off this morning how the Coalition couldn’t access the same data the Government had prior to the election
Under the Charter of Budget Honesty Act 1998 ,the Treasury and Department of Finance release a Pre-election Economic and Fiscal Outlook (PEFO) about week after the writs for this general election was called that updated to the fullest extent possible, all decisions taken by the Government before the issue of the writ and recalculated wherever necessary all economic forecasts based on the March Quarter National Accounts.
Toxic Tony and Joe Fat Back simply made a conscious to neither rework their own figures based on the Treasury update and nor submit those figures to Treasury under the Charter of Budget Honesty lest the mistakes and flat out lies were exposed prior to the election
Even more cynically though, the coalition indeed use the updated figures from the PEFO to attack both the Government and Treasury over the improvement in the budget bottom line in the update that flowed mostly projected higher commodity prices
THIS IS WHY TONY WINDSOR KNOWS WE CANT TRUST THEM
Toxic Tony’s nauseating negativity, devious duplicity and systematic smear campaign is finally coming back to haunt him.
Who is the Australian public going to believe - the Australian Treasury or a bunch of politicians on the make who have run away from scrutiny? It is a no-brainer even for the no-brainers.
If you heard Windsor on RN this morning then it is impossible to not conclude that he is leaning towards Labor. Oakeshott would be sure to follow and Katter is still uncertain but he would miss out on any deal if he did not go with the others.
Windsor made it clear that what concerns him most is not the black hole but the fact that the Liberals attempted to run away from scrutiny and therefore appear untrustworthy. To him, the black hole confirms that they were running from scrutiny not because of any principle (Westminster conventions blah blah) but because they had a lot to hide.
Centrebet is still offering $2.40 on Labor. I doubt that such good odds will last long.
Outstanding , did you read the Title of this story! 11 BILLION DOLLARS , no wonder Joe was sweating so much. This is Fraud on the people of Australia . Who was the accounting firm ????? Maybe the 11 BILLION DOLLARS was Rupert’s bill for advertising fees.
Is anyone honestly surprised?
I’m unsurprised by the outcome, but a little surprised by the scale of the discrepancy. The problem with getting things done separately is that (obviously) the assumptions all differ - or the assumptions are unknown. This is currently the only way to get something that almost compares apples with apples.
Yes, the “real” coalition economic position ends up with a slightly better bottom line, but do remember that this is at the cost of major infrastructure improvements which (imo) are urgently required - especially the fibre network.
Whatever decision ends up being taken by the independents, it will be a positive outcome if there is a standard, agreed method of costing policies prior to an election - and most importantly having that information available to the polity with sufficient time to digest the information before going to the ballot bow (i.e. not in the last couple of days)
No, but I am wondering what all those who voted for him are now thinking - or maybe they’re a bunch of people who advocate creative accounting!
Missed in the roundup here is an excellent article in the Australian by Kate Legge on Oakeshott’s wife and where Oakeshott is coming from at a personal level.
Space Kiddette
I think the problem is that if the COALition meets the independents requests on the NBN there WILL BE a $43 Billion dollar deficit! That is the problem with these figures!
Oh and the bad look that they get as not being able to add up properly!
@David
The one thing I’m sure most Australian’s don’t want is an incoming government that basically went to war with Treasury in order to conceal the fuzzy math in the costings that the Coalition took to the election.
Over the past two months , we’ve heard Coalition such absurd claims as “Treasury just doesn’t understand Coalition policy, that there is a distinct Labour bias within Treasury, Treasury Department trusted” ect ect
How on earth could an incoming coalition government provides stability and work co-operatively with Treasury when they have spent the last couple of months beating up on Treasury for purely political purposes.
As I’ve been pointing out all along, Toxic Tony’s nauseating negativity and relentless attacks politics would eventually be his own undoing
I liked Joe Hockey’s comment that you can’t call it a black hole because it is a discrepancy in the size of the projected surplus.
I haven’t seen any huff-n-puff Media Conferences this morning from the petulant catholic boychild. Has anyone else?
Give the voters a break, Abbott and the creative accounting crew have been exposed by the independent arbiter TREASURY end of story that’s who I trust, as should all fair minded Australian’s. Speaking of Australians it should be noticed News limited papers could not find room on their front pages in nearly all their publications to disclose Treasury facts. Bias by omission? In my humble opinion headline should read using their usual criteria GREAT BIG COSTING CON EXPOSED attempted ROBBery averted.
I am also thinking that this will be a big problem for the CAOLition at the next election.
I suspect that they won’t be able to get away without costing their promises through treasury next time. That means they will have to tell the truth! Now that’s gotta hurt!
Yes, well Joe is the go-to-guy when sh*t has hit the fan and no-one else wants to front up and state the bleeding obvious. So they send in the class clown.
Yeah Space…Toxic Tony, Andrew Robber and Joe Fat Back were on ABC 24 at a press conference half an hour ago doing their level best not to cry on camera.
Interestingly enough, ABC 24 took the liberty of muting the sound while the first few journalists to asked their questions .. each time turning it on again, just as Tony Abbott or Joe Hockey began to respond…no doubt another technical glitch courtesy of Howard appointee Mark Scott
Thanks for that Muse - seems to be an aweful lot of dodgy equipment over there.
Two Bob,
Don’t hurt him - we will have no one to laugh at!
@SKINK you left out the last word of Hockey’s comment: BULLSHIT !
My favourite part of this whole “Black Hole” thing is the skinny little column it gets in The Oz, hidden amongst the two pages of screaming about the Gillard/Greens deal.
Shanahan does himself proud again by managing to report it without having anything in the slightest negative to say about it - imagine if there’d been a “black hole” of such magnitude in the ALP’s costings?
Election, anyone?
I love it that Abbot is now calling for a Parliamentary Budget Office to perform these costings in future. Howard set it up so Treasury would do the costings, but now that the Liberal’s aren’t happy with Treasury’s estimates they want another umpire to do the costings in future.
I mean this is really laughably childish stuff here. Unfortunately the Liberal voting public won’t see it this way. All they’ll hear is the Liberals claiming Treasury don’t know what they’re talking about.
And News Ltd are still reporting that the Liberals didn’t want Treasury to do their costings because of a leak from Treasury. News Ltd don’t mention that the Liberals engaged their mates to do their costings months before the Treasury leak.
I wish someone could sue News for their slanted reporting.
Unlike most of you here, I actually served in Government. The purity of the Government’s figures is a function of their power relationship with the APS. Here’s how it works…
Prior to the election, the Minister wants a policy to extract sunlight from cucumbers.
He asks his department to cost it.
The Department says, “we think it will cost $40 billion”.
Minister says, “You’re taking a worst-case scenario. The model you are using is too pessimistic. My advisers tell me (and cucumber industries research) shows me it will only cost $30 billion”.
Department looks at the matter again, re-adjusts its advice and says, “We accept that we might have over estimated. It’s probably closer to $32 billion.”
Come the time for CoBH, Government submits plan for costings and, gee whiz, it turns out that the plan is worth $32 billion.
Contrast this with Opposition. That put in the same plan for extracting sunlight from cucumbers. Department says it will cost $40 billion. No discussion. No argument. No iterative process.
That’s why this process is flawed and all this talk about black holes is just administrative bull-shite.
@ Acidic Muse.Looked to me more like the three dumb monkeys see no problem,speak no problem,hear no problem.No robbery figures here. Oh what a tangled web we weave when first we practice to account.
Remarkably fair-minded of you, Peter Phelps. Of course both sides play this game. But it puts any claims made by any side for financial probity in doubt. That’s what you meant, surely?
Jezz, Juzzy, you’re right
The Oz website has a small story halfway down the font page with ‘Coalition stands by its election costings’ , with most of the quotes going to Robb, and the lead stories are all about the ‘high-risk’ Greens and the NSW ALP.
I noted the subtle change to ‘election costings’, since as someone pointed out above, they now have no hope of implementing those costings in Government if they have to accommodate the indies’ insistence on the NBN and local pork-barreling
Bear in mind, Abbott said that there was no hole, just a “difference of opinions”. If he still manages to form a minority government, feel free to pay your bank manager a visit and tell him that you DON’T actually have a mortgage, you DON’T owe the bank any money, and if they think you do, well, that’s just a “difference of opinions.”
@Peter Phelps with respect, perhaps your real calling is Market Gardener your explanation is like the jitterbug, it evaded me.
The arguments published in the Limited News Source “The Oz” from Toxic and Robbery this morning don’t hold up.
They claim that they used a different rate of interest. Ok, so I understand that it makes a small difference, but if you changed the govt. treasury figures to the same interest rate we are still talking about the same relative difference.
Also, the contingency figures that treasury use are not just plucked out of the air based on the worst performing governments contingency costs, so they cannot just be dismissed.
Sorry, I spent my life building treasury modelling and accounting systems and in data warehousing and business intelligence and I am telling you the coalitions excuses on the difference aren’t just aren’t enough to make a significant difference.
@Peter Phelps
Nice attempt at vegetative spin but this is much more about creative accounting than you’d have us believe
One of the many duplicitous accounting tricks the Coalition used in this instance was claim an estimated savings of $ 1.15 billion over four years from the Pharmaceutical Benefits Scheme based on REFORMS THAT HAD ALREADY been applied to the PBS between 2005 and 2007.
Therefore the savings from these reforms were already factored both into 2010 budget and the PEFO. The Coalition merely pretended not to realise and double counted them
Most right wing conservatives lie systematically, pathologically and totally without compunction.
Like Taliban suicide bombers, they fervently believe that “God” wants them to do whatever it takes to achieve what the voices in their heads tell them is God’s will. Once you believe the hand of God is guiding you towards your destiny, it becomes possible to rationalise just about anything
@Space Kidette,
Unfortunately that’s not the message that the voting public are getting from News Ltd. I’ve had 3 discussions today with people who all said that they trust Abbot more than they trust Treasury. Their views were that Treasury is another arm of the Labor party. One even said the whole of Treasury should be scrapped and started again from scratch once Abbot gains power.
We have the same argument every election campaign. Whomever is in Opposition ends up having a black-hole, while whomever is in Government ends up with perfectly costed policies. After the election is over, whomever wins jettisons half their policies anyway because the other half end up costing more than what was anticipated - regardless of who did the figures.
I’d really like to see the differences between the 2007 election promise costings and the budget bottom line today. Both sides would have massive gaping blackholes.
However, this is obviously the real reason the Coalition didn’t want their policies to go into Treasury - which begs the question, if they knew something like this might happen, why not correct their figures before-hand?
Perhaps some-what strangely, I don’t believe this will effect negotiations though. I believe at least 1 or maybe 2 are leaning Coalition (hence the recent talk of the independents splitting and supporting different sides). That means Andrew Wilkie may end up being the Kingmaker - a position he’s seemingly trying to avoid. And a forced Kingmaker if one side ends up with just 75…
@ D Smith
About 60% of those who regularly read Rupert Murdoch’s toxic tabloid trash have already been assimilated into the Conservative Borg anyway. It’s therefore simply not reasonable to expect them to process objectively, any new information that challenges their pre-existing beliefs.
These are not the hearts and minds that Julia Gillard is fighting for in this debate , simply because most of these people have no heart and quite a few are seriously lacking in cognitive capacity too.
It should be remembered that a large part of the Coalitions’ working-class base out there in Bogan-Ville are scared, weird, angry, bigotted little people who are endlessly whining about money and what other people do in their bedrooms.
They will invariably vote for their bigotry even when it is to their own economic detriment
In my opinion, one of the greatest mistakes Labour made in this last election campaign was bothering to pitch themselves at this particularly psycho demographic at all. It’s time to choose a new fault line in Australian politics
@Acidic Muse, sadly I completely agree.
An example: My Aunty is retired and lives in a rural town. She loved Howard and thought he really cared for the aged. Unfortunately she listens to a lot of talk-back radio.
Earlier this year she ranted to me that Rudd never did anything for the aged. I pointed out that Rudd had just increased the pension that she is receiving. “Oh, but it’s so small it makes no difference to me at all.” was her response. “Rudd just doesn’t care about us pensioners.”
I pointed out that Howard decreased her pension. “Oh, but he needed to. He had to fix up all the Labor mistakes. He really didn’t want to reduce our pension but he had no choice thanks to Labor.”
Very, very sad indeed.
Revisited: the public fiasco of the Abbott/Hockey/Robb reply to the budget last May. If this three happen to get the nod for government, they have to get on top on their laziness and inattention- and learn from their mistakes.
Why has no-one mentioned that (at least according to Joe Hockey), Hogwarts “Accounting-R-Us” are legally and professionally liable for this pack of lies?
If this is true, then the directors of Hogwarts should probably be thinking about leaving the country about now.
They can certainly kiss goodbye to a large portion of their customer base - at least that part of it who expect decent ethical standard in their auditors!
Of course, Hogwarts may not be too worried - once they establish themselves offshore, they are probably expecting to get a lot more business from the Coalition.
It is a little bit disappointing though. The Coalition should have known that some of these things were pretty dodgy. The bias adjustment, the PBS saving and interest rate stuff ups could all have been avoided with a phone call to Treasury (or just a look at the forward estimates in the Budget)
There are $3.3 billion worth of spending cuts that Mr. Windsor highlighted that treasury found that Mr. Abbot did not tell the public about.
Any clues on what these may be?
And is there anyone who stands up for this deception?
Just wondering?
D Smith, I also have examples of similar thought processes. The only light on the horizon for this is that many are elderly, meaning that each day they are slightly fewer than there were before.
Twobob writes: D Smith, I also have examples of similar thought processes. The only light on the horizon for this is that many are elderly, meaning that each day they are slightly fewer than there were before.
That’s my Aunty I was talking about! Don’t want to think that about her.
Even if she does support the Libs. :p
I get where you’re coming from though.
Teh Oz has a headline: “So when is a black hole not a black hole?”
presumable the answer is ‘when Rupert says so’
@Skink
Surely you weren’t expecting the right-wing noise machine to be calling for in-depth exploration of Toxic Tony’s Great Big Black Hole
Don’t you think it’s already hard enough (pun intended) for Crikey’s resident trolls and other homophobic Daily Telegraph readers to watch Tony Abbott prancing around half naked in his budgie smugglers without developing fetid palms and steamy sweaty hairlines
@ D Smith
Show your Auntie this and just substitute “America” when it is mentioned with “Australia”
http://www.youtube.com/watch?v=tQjDW_nBTIg
@ SKINK or when the assessment is being proselytized by a complete ar***hole
We all knew the lib economic line up were no good. Now the real question is why did the ALP let the libs get off the hook during the campaign?
Had they pounded the economic dunces three weeks ago we’d now have a majority ALP government. It’s less comprehensible than the Pakistani test teams performance, at least they got paid to lose.
also substitute “education” with any issue that involves fairness, equity and social justice.
Way to go two bob- 11 billion hole + $43 billion NBN (only 26 of which are public dollars)= 44 billion dollars.
Phoney has always considered his narcissistic self a super hero so he needs a superman type costume where he can wear his pygmy budgie smugglers- The 11 billion dollar man.
On a different note that principal who replaced gay with fun for the Kookaburra that sits in his gum tree, should have made it ‘how homophobic your life must be’.
oops 55 billion
Oh jeezz…54
Mack The Knife is Tony Abbot, or perhaps Joe Jockey! We have discovered you!
*Hockey.
Although the thought of good old Joe as a jockey should send shivers down the spines of PETA and the RSPCA.
It’s the LOLiberals, who’ve accidentally lost $11 billion down the back of the sofa!
Look up #costingsgate on twitter and get an idea of the scandal that is developing. Also. in particular, look up the Peter Martin blog.
the ABC is now running: “Black Hole no deal-breaker, says Abbott’
he said that with about as much conviction as Fred Nile said he was ‘not perving’
who knew Fred could type one handed?
and kudos to Acidic Muse for ‘Great Big Black Hole’
I want that to be in general usage before the seven o’clock news tonight
@D SMITH - As a woman on the pension, and an Aunty to who knows how many these days, I’m totally opposite to your Aunty. I know exactly who’s responsible for my pension increase, and hopefully, next month we’ll receive another. I think the increases under Howard(twice yearly, March and Sept/Oct) never got above $9-10 as opposed to being about $100 better off thanks to the Rudd govt.We should receive an increas of approximately $30 this time. Bring it on, I say!
The coalition’s nonsense about Treasury amuses me. Aren’t these the same people, including Ken Henry that Costello/Howard had no problems with for nearly 12 yrs? Isn’t this the dept where Gordon Gretch came from, a pro Liberal???Now they’re all dishonest, pro-Labor sympathisers who’d risk their jobs by furnishing incorrect or deliberately false information? Too convenient! And some think, that if Abbott gets in he should sack them all - I thought Rudd should have if he found any pro-Coalition people working for his govt.
We should thank our lucky stars there was a hung parliament. If the nation swung much more to the Coalition they would have got in on these fraudulent figures and by the time we found out it would have been too late.
It takes a special brand of economic mismanagement to pledge to cancel a 43 billion dollar infrastructure project and only end up having 500 million to show for it.
what happened to all the trolls?
did they get sucked into the black hole?
A Great Big Black Hole no doubt!.
@ Skink.
Still no logical rebuttal for my post above from Lefties…
Ask Bernard Keane if he ever got a request for a costed proposal?
Ask him if he ever entered into an iterative dialogue with a Minister or the Minister’s Office?
Ask him if Departmental costings were ever queired and amneded?
So all this pious posturing about how Labor’s costing were ‘accurate’ and the Coalition’s were ‘inaccurate’ is just pure spin from a group of desperate Lefties wanting to reach for any straw to stay in power.
The system we have has been found wanting if it takes a hung parliament to wring out the scrutinizing of any proposed economic budget! How did it come to this!!!
When there is every chance of a double-dip recession in the U.S. and we know that this type of mess reverberates around the world, I ask can we afford to have a Government who is known to be creative with its accounts and less than honest when there is not even a crisis?
Mack the knife
I am an admirer of your posts but not your maths.
The COALition were promising an $11 billion SURPLUS.
So with this blocked out by tones Great Big Black Hole, it appears that to meet the independents NBN requests it would require a $43 billion dollar deficit.
That said the real cost of the NBN is not actually $43 billion dollars , but live by the sword die by the sword I say.
ps, it is very unlikely that you will ever find a mistake in my maths, it is what I do for a living.
Don’t blame the accountants, all they do is add things together and apply Aus accounting stds and tick it off which is why the coalitions offer was ticked off as ok. (I’m not an accountant, too sad a job for me!)
@ Peter,
Thanks for your lefty comments as a backup for dodgy Treasury modelling techniques. The Treasury did show a range, and as you are “in the know”, you would know this is from the sensitivity of the assumptions with the information they have. How about the coalition provide more assumption data to increase the granularity and thus reduce the range? Oh wait, so it will still be within $7 to $10 billion? - erm yes…..More importantly, some of the coalition figures were based on incorrect application of assumptions, so not merely an argument about the cost drivers, but doing the friggin modelling incorrectly. And yes, assumptions behind the cost drivers should be challenged, now let’s wait and see the Coalition provide a robust and supportable response? Which they would have been doing all last week when Treasury was modelling - you seem to be oblivious to this process? Until then, the current estimate stands….
Mook Schanker,
I thought it was pretty telling when the accountants signed off based on assumptions provided, which pretty much said it all. All care on the numbers, but the assumptions were all provided. And if the liberals are dumb enough to play the game this way and pay our bill, we are smart in accepting the cash!
@PeterPhelps
please remember that the phrase ‘black hole’ was coined by Windsor, who you want on teh blue team, not by the lefties. Abbott needs to answer to him, not to the rest of the electorate, yet
SpaceKidette made quite a good answer to your post and trumped your “I was a public servant once” with “well, I built Treasury costing models’
as Bernard Keane points out today, it’s not just the arithmetic that is the question, it was their avoidance of the scrutiny that Howard insisted upon, and their outright hostility towards a Treasury that they worked with for three terms.
Why Hockey and Robb must be sacked
Karen Maley
Published 1:29 PM, 2 Sep 2010
________________________________________
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Tony Abbott’s economic credentials have been dealt a heavy blow following the discovery of a $7 billion hole in his budgetary estimates. Even worse, there are now questions about his political judgment after his insistence on forging ahead with a lavish and ill-conceived $3 billion a year paid parental leave scheme, while preaching the need for fiscal restraint.
The Coalition refused to submit most of its policies for official costing during the election campaign, claiming that it was worried the information would be leaked. But last week the three key rural independents stepped up the pressure. After initially resisting, Abbott finally agreed on Friday.
But the results have brought Abbott little joy. The official costings by Treasury and the Department of Finance have uncovered a hole of at least $7 billion over four years. While the Coalition had boasted that their policies would improve the bottom line by $11.5 billion, the overall impact was likely to be a much more modest $4.5 billion.
The new costings have undermined Abbott’s argument that the rural independents should support him because he offers superior economic management. Indeed, one of the independents, Tony Windsor, says the revelation of the ‘black hole’ has made him suspicious of the Coalition. But they’ve also focused unwanted attention on Abbott’s poor political judgment in proposing an exceedingly generous paid parental leave scheme.
From the outset, Abbott’s parental leave scheme was controversial. It lavished non-means-tested benefits on upper- and middle-income earners. To pay for the scheme, Abbott proposed an extra tax burden on medium and large-sized companies (See Abbott’s poor parenting, August 10).
Under the Coalition’s scheme, stay-at-home parents – typically mothers – would receive their full salary, capped at $150,000, for six months, as well as their 9 per cent super contribution. This meant that a successful lawyer or investment banker earning an annual salary of, say, $250,000 would pocket an excessively generous $81,750 in parental payments for staying at home to look after her child.
This is a far more extravagant than Labor’s paid parental leave scheme, which offers parents who stay home the minimum wage of $570 a week paid over 18 weeks, or a maximum of $10,260.
The difference in the generosity of the two schemes translates directly into their cost. While Labor’s scheme will cost a mere $250 million a year, the Coalition’s scheme was expected to cost $3.1 billion in its first year of operation from mid-2012. To fund the scheme, the Coalition planned to introduce a 1.5 per cent levy on about 3370 medium and large-sized companies with a taxable income above $5 million.
But the report from the officials calculates that the overall cost Abbott’s paid parental leave scheme would be around $250 million a year more than the Coalition estimated. As a result, it’s one of the policies contributing to the $7 billion ‘black hole’.
The report also highlights major errors by the Coalition, including counting future savings as a result of reforms the Pharmaceutical Benefit Scheme that are already included in budget estimates. The Coalition also made a mistake when it tried to estimate interest savings that would arise from scrapping the Labor’s planned national broadband network. In addition, the bureaucrats estimated that instead of saving $600 million, the Coalition’s policy of providing incentives to help long-term unemployed find jobs, was likely to cost close to $400 million over four years.
With his economic credibility now under attack, Abbott needs to act quickly. His first step should be to reinforce the economic credentials of his front bench. In particular, he must replace those responsible for the disastrous budgetary miscalculations – shadow treasurer Joe Hockey and shadow finance minister, Andrew Robb – with more capable ministers.
Secondly, he needs to demonstrate to the rural independents that he genuinely cares more about improving the country’s finances than winning applause from the urban elites. And to prove that, he’s going to have to jettison his paid parental leave scheme.
Abbott’s Black Hole just blew him out of the water. This explains why he abandoned the Charter of Budget Honesty.
If he had submitted his costings to Treasury before the election, the last week of the campaign would have been dominated with arguments about his economic incompetence. His support would have leeched away. Instead of almost snatching Government, Gillard would have been re-elected. Abbott’s leadership would have ended, and the Libs been looking for their fifth messiah in 3 years.
Instead, he tried the Charter of Budget DISHONESTY. It nearly worked, and still might of the 3 independents decide to back him.
The Independents should consider what the election result would have been if Abbott had been Honest instead of Dishonest with the electorate.
@ Skink
You still haven’t addressed my fundamental point - Labor have a structural advantage in getting their schemes pre-costed, thus giving them some sort of BS respectability as ‘more accurate’.
If the Coalition has access to the same iterative process as the Government, then this would not be an issue.
But it is being spun in the media like this is some great failing, in the shadow of the brilliance of Labor costings. It is nothing of the sort.
This is not a criticism of Treasury - if anything it is a clarion call for either:
Full access to Treasury officials, including the ability to test assumptions BEFORE policies are formally submitted (unlikely).
OR
The equivalent of the US Congressional Budget Office under the auspices of the DPS.
Oh wait, that last one is already Coalition policy…
of course the incumbent government has an advantage, I don’t think anyone has suggested otherwise.
I direct you once more to BK’s piece, where he discusses exactly what you said. The Libs have been hoisted by their own petard over budget honesty. Howard used exactly the same argument against the ALP last election
but if Abbott had discussed his budget with the Treasury beforehand, and got the correct parameters, he might have saved himself some of this embarrassment
the point is he has made himself look a goose - not to you or me, but to The Three Stooges.
So it seems that all us here except for a few whining wing nuts are in full agreement that Toxic Tony’s economic credentials are now DEAD, BURIED AND CREMATED
Now that Andrew Wilkie has pledged his support for a Labor minority government, I suspect this is pretty much all over bar the shouting - rest assured there will be plenty of that emanating from the lunar right when Windsor and Oakeshot announced that Toxic Tony and the Toorak Taliban simply can’t be trusted
The funny thing is Abbott reputedly has a Bachelor of Economics degree.
@Socratease
Despite his obvious fascination with fuzzy maths, Mr Rabbots problems have always been more ideological than economic. Let’s not forget his is the guy who said Mining companies are already paying too much tax as BHP announced a 14 billion dollar profit on which they will pay circa 17% in total taxes and royalties once they take advantage of every bit of creative accounting that has been legalised specifically for their benefit
@TWO BOB - That $43 billion for the NBN is over 6-8 years though! So if you consider $6-8 billion each year out of a $1.5 Trillion budget that’s pretty good, considering what we’ll get. Funny how a Labor Govt has to provide infrastructure and really good policies/programs when they’re in, and the Coalition just let the country wind down(except for buying votes and looking after the wealthy etc). I think of Medicare as a good example of this! I think the NBN will be a similar milestone in our lives?
@SOCRATEASE - Abbott is not a good advertisement for a Uni education. The man is plain stupid! Talks and walks like a gorilla(sorry gorillas) and can’t even pronounce ‘sure’? He says ‘shorewa’? Imagine him representing this country in the UN? Cringe, cringe! How embarrassing! If he’s a Rhodes Scholar I’m a female version of Einstein!
What sort of an idiot, who’s going to fight his opposition over a $43 billion dollar country wide Broadband service wouldn’t educate himself about it. He was on national TV with Kerry O’brien and just said he wasn’t a technical person. I’m older than he is but went to TAFE and did 4 different courses so I’d be computer literate - I wanted to be able to use the gift my son gave me, and be able to understand what people were talking about! I find his behaviour strange, and him an embarrassment!
OMFG…..The audacity of News CrapOnOration seemingly knows no bounds
The Australian online is running a headline that says “Forrest, Oakeshot in joint call for mining tax summit”
The only problem is that nowhere in the article does Oakeshot say anything of the sort .. what he says in fact is that even after listening to Forrests’ pitch, he may still back a resources rent tax.
Murdoch is now seemingly so omnipotent he can take words out of Andrew Forrest mouth and make Rob Oakeshot say them
From the ABC News website:
i voted for tony - i want julia now - if given another chance i would vote for julia - why - i like her better now.
What’s clear to me from the last 2 weeks is that Gillard knows the art of practical negotiation, whereas Abbott knows only threat and bluster.
Space Kidette asked ‘Election, anyone?’
Please God, nooooooooo………!!!!!!
What’s a few billion, give or take, between friends.
If we assume Mr Rabbit has engaged in the same strategy with each of the other 3 independents, each of whom has a long list of pet projects, similar in size and scope to the hospital in Tassie, then Abbott will have committed at very least another 3 billion dollars ……. Of our money. That we don’t yet know about. Can’t wait to see what Abbott has promised each of the other three. Makes it harder for each of them to accept such blatant, bribes or blackmail now.
And one other point re treasury. If Abbott were to become PM and given his strident distrust of finance and treasury, who prey tell would he get his finacial advice, projections and costings from? The same independent mob who either can’t count. 11 billion dollars is a bit embarrassing to stuff up by don’t you think?
I cannot remember a single election, all my life, in which one or both sides were not accused of a “budget black hole”.
That’s not a black hole. The real black holes — the great gaping chasms into which this country’s wealth vanishes without trace — is made up of a number of things
* the inefficiency of our taxation system
* our bottlenecked ports and our transportation arrangements in general
* the zero-sum-game of the housing investment pressure-cooker
* the cost of commonwealth-state turf wars, blame games in hospital funding, etc
* the commonwealth one-size-fits-all industrial relations regime for the whole country
* the stalemate in our water regimes and the horror of Greens-influenced city governments towards modern irrigation technologies
* all the preferential trading treaties we sign up to, under the misleading label “free trade agreements”
These are some of the features of the black hole sucking Australia into mediocrity. All this stuff about next year’s budget promises? Those are just short-term shopping lists. Most of the promised spending is stupid. But as long as that’s what everyone focuses on, the shopping lists will just get stupider and stupider, while the real black hole gets bigger and bigger.
Excuse my indecision about the singular and plural “black hole” and poor editing. But I think you all can see my point.
Take for example Abbott’s stupid $75,000 baby bonus. Or actually $81,750 including super as OUTSTANDING OUTCOME points out.
It’s a disgraceful scheme, but the $3.1 billion cost to company tax is only a fraction of what it would cost Australian society. The far greater cost would be the effect in driving the housing price bubble even further upwards. Inequality in mortgage payments is the main rationale for the inequality in proposed parental leave rates.
That housing bubble is a zero sum game, which adds nothing to society’s wealth. It simply transfers money from some people to others, by squeezing the prices of second hand dwellings, simply by virtue of the unavailability of alternative dwellings for sale. The true cost of this will run into the hundreds of billions, because home buyers will pour an abnormally high fraction of their future wages into excessive mortgage payments instead of spending that money on consumption or investment which flows through the economy.
SOCRATEASE - If Oakeshott is really going to push for another look at the Henry Tax Review, then good on him. That would make him the only one of the independents so far who have said anything about real structural reform. The rest of them seem to be just fiddling over shopping lists.
@FreeCountry
I totally agree with you in terms of the myriad of important issues that never got seriously attention during this election
Nonetheless, Toxic Tony and the Toorak Taliban are now simply reaping what they have so cynically and despicably sown.
The Coalition ran a viciously relentless smear campaign predicated on stopping waste that was massively overstated and paying down a debt that was comparatively small by world standards - and undoubtedly necessary in the dire circumstances of the GFC
Having created an unprecedented level of hysteria over this nations need for greater fiscal responsibility, the Coalition are now dying by the very sword with which they cynically sought to eviscerate our democracy.
Joe Fat Back’s whining about Andrew Wilkie “setting them up” is just laughable.
The Coalition set themselves up for this from the very start by dragging our political discourse down to the lowest common denominator in an attempt to grab power they neither deserved nor were ready to wield responsibly
I for one am just loving watching them choke on it
They both ran negative smear campaigns.
Abbott’s campaign was based on simplistic catcalling about spending, with no analysis the quality of that spending, and it was also based on fear of boat people. Not one single attempt to explain to the public the difference between shopping lists and structural reform.
Gillard’s campaign was based on character assassination of Abbott, and on fear of workchoices, in the face of the clearest series of statements I’ve ever seen from a party that a policy was off-limits. Gillard was lying through her teeth through that whole campaign, and she smiled every time she said workchoices because she knew that shit sticks.
So don’t try to tell me that either of them has earned any admiration, or indeed any right to govern. The choice facing the independents is which of them is the less disgraceful and will do the less harm.
I find myself strangely in agreement with @FREECOUNTRY in terms of the analysis on what should be more longterm structural reform as opposed to the short sighted policies been put up by both APL/LNP.
These are the questions that need to be represented in more detail to the public rather than the mass media and spotlight politicians referring to the ‘Henry Tax Review’ in general. Using this as an example as the same can be said of the Ross Garnaut report. Is it possible to improve people’s awareness of these reports and teh merits of them or am I just being naive?
Maybe a serialised commentary on the actual content of both the Henry and Garnaut reports, stretching over six months? Preferably with comments from front-benchers where possible (not just from the Greens - I could probably lip-sync their comments myself).