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Aug 12, 2011

Daring to dream on the Coalition's costings

The problem with the Coalition needing to find $70 billion in savings is they never found the first $50 billion last year.

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What an expensive indulgence Tony Abbott’s unresolved issues about climate change are turning out to be. Doesn’t believe in climate change enough to want to address it properly, doesn’t want to risk looking like a complete denialist by doing nothing.

The result would be costliest policy reversal in Australian history since, well, the last major Defence procurement project. $24.5 billion paid back to industry for carbon permits — no wonder Andrew Robb is trying to convince business not to buy them — on top of the Coalition’s $3.2b direct action plan.

The direct action plan is grossly underfunded if it’s to meet a 5% abatement target by 2020, which will require extensive purchasing of overseas permits. The Department of Climate Change estimated it will cost an additional $20 billion over the period to 2020, in addition to the Coalition’s estimate of $10.5 billion. The Coalition’s response, which at least has the virtue of simplicity, is to say they’ll sack the entire Department of Climate Change.

While Greg Hunt insists that the policy is soundly costed, and denies suggesting anything to the contrary it relies heavily on buying biosequestered carbon for under $10 a tonne, when experts say it will cost a minimum of three times that. Even farmers who enthusiastically endorse soil carbon have said it’s not costed properly.

Most likely this problem won’t be addressed until the Coalition is in government and the penny drops that the policy isn’t delivering as Hunt has claimed to shadow Cabinet, or delivering at such expensive levels as to require additional Budget supplementation. Economic recovery by that stage should have made finding several billion dollars a year much easier than currently; certainly admitting now that the policy can’t work at current levels of funding would be a poor look for the Coalition. Alternatively, the Coalition can just revert to the Howard-era strategy of talking about doing something about climate change while doing exactly nothing of consequence. Hey, it worked for a decade.

By the same token, an ANAO report on the cost of the “direct action” components of Labor’s carbon pricing package — particularly buying dirty coal-fired power generation capacity — should also present some interesting findings.

The problem for the Coalition finding $70 billion in savings is that they still haven’t properly accounted for the savings they claimed to have found last year. When Andrew Probyn and then Peter Martin rose at Joe Hockey’s National Press Club post-Budget appearance to note major problems with the $50 billion savings package eventually compiled by the Coalition between last year’s Budget and the election, Hockey’s only response was to attack them and insist the savings were “right at a point in time.”

In fact the numbers were never right (even putting aside the bizarre goings-on with WHK Howarth), and the $11 billion worth of problems identified by Treasury and the Department of Finance played a major role in cruelling Tony Abbott’s chances of securing the support of Rob Oakeshott and Tony Windsor.

The response of Andrew Robb and Hockey has been to suggest the $11 billion was an honest difference of opinion between themselves and officials. And on some elements of the $11 billion, they had a point. The problem is, the Budget isn’t put together by the Treasurer and Finance Minister, but by Treasury and Finance officials. The Coalition’s persistent tactic of insisting that every expert who disagrees with it – climate scientists, economists, ag scientists, accountants – is simply wrong hits a brick wall on this.

Instead, what if the Coalition decided, driven by the need to find $70 billion, to go looking for some serious savings? That might lead them into transfer payments, grown fat as successive governments have pandered to Australians’ entitlement mentality. Or into business welfare, where billions still flow to multinational companies that employ a diminishing number of Australians in semi-skilled manufacturing jobs. Or into tax concessions, where one set of concessions costing billions are directed at policy outcomes at which another set of concessions worth billions are aimed at stopping. Or even, most iconoclastically, into the Defence budget.

Of they could scrimp together some savings by axing Labor programs, throw in some double-counting and promise to sell Medibank Private for the fourth, or is it the fifth, election in a row and boldly declare they’ve reached $70 billion, complete with “audit” involving someone checking the numbers in the end column add up. They wouldn’t try that again would they?

Bernard Keane — Politics Editor

Bernard Keane

Politics Editor

Bernard Keane is Crikey’s political editor. Before that he was Crikey’s Canberra press gallery correspondent, covering politics, national security and economics.

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25 thoughts on “Daring to dream on the Coalition’s costings

  1. Venise Alstergren

    GAVIN MOODIE: Old pal. In the vital Higgins by-election where Ms Kelly O’Dwyer, thanks to Peter Costello, was standing for the first time. Labor chickened out by not fielding a candidate at all and Ms O’Dwyer won in a canter, all leading up to a Federal election. At the same election the Greens fielded a candidate whom I shan’t name because he writes for this publication. I deemed him to be the worst possible candidate-on a par with the DLP-and lower, if possible; it was his views on the pro-censorship of the internet that incurred my wrath.

    I wouldn’t vote for a Family First member any more than I would vote for a DLP member, or indeed anyone who stands for the inane name and rhetoric of any religion; ex-senator Fielding, take a bow. Ms O’Dwyer happens to be Catholic, so that tipped her out, even if I could have brought myself to vote Liberal. So do you know who I ended up voting for in the past three elections? The Australian Sex party. Why did I vote for them? Because they seemed like decent human beings who had a decent attitude towards conservation. Rather than the lying crooks which constitute all if the Coalition parties- together with quite a large lot of the present Labor Parliamentarians.

    Why don’t you come and live in this electorate instead of quoting the Electoral Commission’s voting figures? That way you may come to realise that it is not a joyous selection of candidates. As for you final suggestion-I despise people who wont vote. They make a mockery of our hard won freedom. I have nothing against a candidate who is in favour of a specific issue, but prefer to see someone who, unlike the Coalition, has a philosophy.

    Thank you so much for your twee little lecture, and for the rancid opinions expressed therein.

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