Both sides are stuck with an expensive superannuation policy that will cost billions in future years, regardless of what happens with the mining tax.
When Julia Gillard and Wayne Swan walked into the main committee room in Parliament House on July, 2010 to announce the new mining tax deal hammered out with the world’s biggest mining companies, they may have thought they were finally free of the issue that had helped destroyed Kevin Rudd’s prime ministership.
“We’ve been stuck on this question as a nation for too long,” the newly minted Prime Minister said at the time. “Today we’re moving forward together …”
Two and a half years on, the government is still stuck on the question, considering changes to the tax it managed to get through the House of Representatives at the end of 2011 in a triumphal end-of-year session that yielded Peter Slipper’s ill-fated speakership as well.
On current form, the MRRT will raise barely enough revenue to cover the $240 million cost of the first year of the increase in compulsory superannuation in 2013-14, let alone the $500 million the following year or the billions a year it will gradually cost via concessional taxation, never mind the other expenditure attached to the mining tax.
That’s not an immediate problem for the government, given attention in the May budget will be on 2013-14, but it’s a poor fit with the Prime Minister’s commitment the other week to find “structural savings” to offset the long-term cost of NDIS and Gonski reforms: in effect, it still has some catching up to do on the MRRT before it can start from scratch with finding cuts for disability services and education.
Kevin Rudd sniping today about the tax — making the high-minded suggestion that “history will be the judge” as to whether Gillard and Swan gave too much away to the big miners — only serves to draw attention to its troubled gestation, including Rudd’s own wretched handling of the Henry Tax Review.
Labor’s problem, though, is relatively simple compared to the tangled knot the Coalition has wrapped itself into. Labor’s tax doesn’t raise enough money. The Coalition simultaneously decries the tax for not raising enough money, and for being damaging to the mining industry, and promises repeal, but remains — despite a stumble by Joe Hockey on Friday — committed to the compulsory superannuation increase it funds. So it too has the $240 million, then the $500 million, then the billions rolling off into the outyears on its books, and even less money to offset it than Labor.
“This is pretty immature stuff, heavily influenced by the way we assume fiscal rectitude is the be-all and end-all of economic management …”
How the Coalition will deal with this won’t be explained until some days before the election. Yesterday Joe Hockey used a statement of the bleeding obvious by Phil Bowen, the head of the Parliamentary Budget Office about PEFO, to justify delaying the release of the Opposition’s policy costings until after the release of the Pre-Election Economic and Fiscal Outlook. The most accurate costings would be done after the release of PEFO, Bowen told Estimates. That, plainly, doesn’t stop the Coalition from releasing individually costed policies or savings measures. The only thing it stops is an Opposition forecast of what its likely deficit or surplus will be — and even then the only discrepancy will be the difference between the budget forecast in May and the PEFO forecast in mid-August.
Still, all this is a straw man. Joe Hockey correctly pointed this out this morning, saying “we will do what Labor and every other Opposition has done. That is, release policies even well before the election.” That’s not strictly accurate — Hockey and Andrew Robb put out their deeply flawed costings virtually on election eve in 2010. But oppositions, no matter what their stripe, are not in the habit of exposing their fully costed policies to enemy fire until as late as possible. In effect, Hockey is admitting that political reality, and not PEFO, is the reason why there’ll be no costed policies until the election campaign. But Labor did precisely the same thing under Peter Costello’s Charter of Budget Honesty charade.
This is pretty immature stuff, heavily influenced by the way we assume fiscal rectitude is the be-all and end-all of economic management, with even minor deviations or errors blown up into evidence of ineptitude or worse. The faux-scrutiny of “gotcha” moments in election campaigns thereby prevents genuine, nuanced scrutiny that takes into account the broader economic and fiscal context.
In Labor’s case, though, the ongoing problem of the MRRT is a difficulty entirely of its own creation. The government hasn’t “moved forward” at all from that cold Friday morning in 2010 when it thought it had put its mining tax troubles behind it.