To its credit, the Government’s first go at finding savings in the Coalition’s expenditure has scored a direct hit in the pork barrel. An entirely new National Party rort, the “Growing Regions” Program, announced by then porkmaster-in-chief Mark Vaile in September last year, has been axed, saving nearly $150m.

“Drought relief” handouts totalling $116m have been cut. Regional apprenticeship incentives ($50m) have been chopped, while nearly $16m in ethanol subsidies have been removed, despite Dick Honan’s generosity to the ALP. And funding for the Nats’ pipedream of an inland rail line has been delayed, although not, inexplicably, cancelled altogether.

It’s not as though the country cousins, who did so well out of the former Government, are alone in feeling the pain. Union and league miss out as well, while our angling friends are doubtless dismayed that the Fishing Hall of Fame – which with any luck will become emblematic of the Howard Government’s unparalleled contempt for taxpayers – is not to proceed.

Tanner, however, is being disingenuous when he refers to these as relating to pre-election “desperate promises to buy votes”. These aren’t Coalition election promises, they’re fully-fledged expenditure commitments made by the previous Government. If funding recipients – say, John O’Neill at the ARU – have entered into contractual arrangements based on those commitments, it’d be an interesting case as to whether they’re entitled to compensation for now having to break those contracts.

But political considerations have tempered the Finance Minister’s zeal. An easy saving this year would’ve been to chop back discretionary grants. Most portfolios have programs that provide a flexible source of funding subject to ministerial approval. Ministers love them because it allows them to fund one-off things that take their fancy or meet some political need, while Finance hates them because expenditure is so hard to forecast properly. They’re not usually large, but collectively they run to billions across the Commonwealth.

Despite the best efforts of Coalition Ministers to empty the cash vaults before the election, most of these programs are currently underspent. The previous Government had a long-term problem of committing more money than its bureaucrats could spend, and this will have been exacerbated by the interruption to normal business occasioned by the election and arrival of new ministers. If Tanner had demanded even a fraction of that likely underspend now, he could’ve added tens of millions to this year’s savings – though at the cost of upsetting his Ministerial colleagues.

Then again hopefully Tanner is chasing bigger game. For all the talk about fiscal pain, it’s not as if there isn’t ample scope for serious reductions in expenditure, if the political will is there. The private health cover rebate should be eliminated or at least means-tested. The favouritism toward private schools could be curbed. The generous handouts to multinational car manufacturers in the Automotive Competitive Investment Scheme could be ended. The baby bonus could be eliminated in favour of higher immigration. The apparent immunity of Defence from any form of budget scrutiny could be ended.

Each of these would save billions in 2008-09 and beyond. Each is almost certainly off the agenda either because of Labor’s incessant me-tooism or political caution.

Even just three months in, Rudd’s economic conservatism is subordinate to his political conservatism.

Peter Fray

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