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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.


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?


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

  1. Mark from Melbourne

    What continues to puzzle me is how is it that any semi-economic illiterate can understand that what Joe, Tony and Robb have been trying to sell doesn’t add up, but that they keep shoeing in the “better economic managers” in all the polls. This disconnect is worth some serious study.

  2. michael r james

    @Mark from Melbourne.

    What percentage of the population do you think is either “semi-economic illiterate” or arsed enough to give 5 milliseconds to the subject? They mostly pick up their pre-digested opinions from the front page of News Ltd (and ABC News which is the same thing). Day in, day out, News Ltd repeats the same garbage–even if inside on page 98 you might find occasional articles criticizing the flakey policies of the coalition by Mega/Steketee/van Onselen (who, by definition are only read by the economic literate).
    Admittedly they also have to close their ears and cover their eyes to Malcolm Turnbull, and 100% of foreign economic commentators. It seems like an amazing feat but then I guess that is what illiterate means. (TTH, L, SB & others will be along here soon enough to prove the point).

  3. David Hand

    Memo to Bernard-
    The ALP is in government and the Liberals are not. So Tony Abbott’s “unresolved issues about climate change” are not “an expensive indulgence” and cannot be the “costliest policy reversa”l because they have not, and are unlikely to, cost anything.

    This is bacause in the two years between now and the next election, the policy musings of Abbott and Hockey from opposition will go through significant change.

    If you really want to talk about “expensive indulgencies”, maybe you might comment on the pathetic take up of the NBN service where it has been rolled out and tell us about the real impact of real policy being really enacted by the people really running the country, who, in case it escaped your notice are the ALP (or maybe Bob Brown).

    It would be interesting to see you speculate about when the $40+ billion in the NBN will be transferred into the liability of the downtrodden taxpayer. You can poke at Abbot and Hockey’s flakey numbers but Conroy hasn’t even used the back of a fag packet to calculate the business case of the NBN.

  4. Gavin Moodie

    The Coalition’s policies should be scrutinised if it is to be taken seriously as an alternative government. Furthermore, its criticism of the Government has little force unless it can offer a better alternative.

    I presume that the Coalition would drop any pretence of dealing with global warming should it win government at the next election.

    The low take up of the national broadband network is hardly to the point now, for 2 reasons. The NBN is replacing copper so everyone who has a landline now will be on the NBN when it is rolled out. And service providers will start offering more services that uses the NBN’s capacity once it reaches a reasonable number of people; its audience is far too small so far.

  5. JamesH

    Hey! I’m entitled to my entitlement mentality!

  6. leone

    Ahhh, Tony Abbott, darling of the braindead. Apart from his financial illiteracy, here are some other things you won’t have seen mentioned in the Daily Telegraph or on Their ABC –
    Abbott filmed eating a banana – most Aussie families haven’t ben able to afford bananas for months, yet there he was, shoving one into his cakehole and not sharing.
    Abbott and family jetting off on an overseas holiday just days after he had a go at the Prime Minister for taking a couple of days away from selling the carbon tax so she could catch up on other stuff.
    Abbott taking That Holiday after trying to tell us for a year or so that he was ‘just like us’ and struggled to pay his mortgage. Did he pay for That Holiday with some of the proceeds from his $750,000 loan?
    Abbott giving the finger to Queensland by choosing to holiday overseas. Didn’t he know Queensland has been pleading with us to take our holidays there?

    And still this prancing fool gets favourable news coverage. Why? And why does ‘the media’ keep up this stupid line that only the Libs can manage the economy?

  7. david

    leone perhaps the self titled ‘know all’ here David Hand would like to answer your pertinent questions, he appears to consider he is infallable on all matters. I suspect he probably knows how many times a day Abbott breaks wind!!!

  8. David Hand

    Hmmm. Leone’s pertinent questions.
    Are people on the right side of politics brain dead? No (that answer does not require infallability)
    Should Tony Abbott share his banana? Not if he doeasn’t want to. (hmm. not too much of a challenge to alleged infallability there either)
    Is Tony Abbott allowed to take an overseas holiday? Yes.
    Does Tony’s overseas holiday indicate that he is not like us? No. Accoring to the Australian Bureau of Statistics, 6.8 million overseas trips were made by Australians in the year ended June 2010, of which 82% were for a holiday.
    Did Abbott “give the finger” to Queensland by going overseas? Quite possibly, along with about 5.5 million other Australians, including Queenslanders. Though Queenslanders should not complain, there’s 4 million Kiwis across the Tasman all of whom holiday overseas in Queensland.
    Is Tony a prancing fool? Er, I don’t think so, though I disagree with his politics.
    Do I know how many times a day Tony breaks wind? Sorry, my fallability is exposed as I have no idea.

  9. Hugh (Charlie) McColl

    It’s OK Leone, you can get it off your chest at Crikey. Everyone else does.

  10. zut alors

    It’s an horrendous thought but perhaps the Coalition had more economic nous when Cousin Jethro (aka Barnaby Joyce) was Finance MInister.

  11. John Bennetts

    Pay that (Zut) man!

  12. Bellistner

    Either option gives me cold shivers.

  13. Bellistner

    Addendum: @ Zut

  14. Venise Alstergren

    LEONE: Just in case you’re not joking. “”And still this prancing fool gets favourable news coverage. Why? And why does ‘the media’ keep up this stupid line that only the Libs can manage the economy?”” ANS: Because so much of the media is owned by Rupert Murdoch. Even the ABC gets its news from CNN.

    The main problem about the ‘dancing fool’ is his fundamentalist Catholicism.

  15. Glenn Brandham

    Onya Venise, nice one. I watched the mad monk front up to the WA liberals over the weekend…what a performance. Again, another month drags by and the coalition is yet to put up any policy on any subject for us to discuss. Isn’t it funny how the neither the National Party nor the Liberal Party could ever conceivably win office on their own and are forced to form a coalition in order to have a chance at government are so idealogically driven to destroy a coalition formed by the ALP and a triplet of independents? I wonder if the ALP would have resorted to the tactics of the Nat/Libs if the roles were reversed?

  16. Venise Alstergren

    GLENN B: Exactly! I too have always been amazed at the pious waffle about ‘Labor
    and the Trade Unions’ and ‘Labor and the Greens’ which the Libs pour forth with venom, and lay on with a trowel-and people buy it ??!! When there can be few occasions when the Liberals would have made it into power without the Nashos. Makes me boil.

    Unfortunately the system is so ingrained that perhaps Labor would feel like knocking motherhood to criticise the C O A L I T I O N on this point.

  17. David Hand

    I just want to clarify that the way the coalition works is that they generally do not stand candidates in each other’s electorates. This is mainly to give rural Austalia their own voice in national politics. Personally, I’m no fan of it but it explains why the Libs can’t win on their own.

    It’s also why the Labor/Green/Independent current arrangement is much more unstable. They will all be standing against each other come 2013 and this influences their political activity in the current term.

    Don’t hold your breath for too much coalition policy at the moment. They learnt from Hewson’s experience with fightback.

  18. Venise Alstergren

    DAVID H: If they can’t afford to field their own candidates in rural electorates, and they can’t exist without the National Country Party’s candidates. Then we should introduce First Past the Post voting. We are, after all meant to be a democracy. Not once in my entire life have I ever had the chance to vote for the Party I want to see get into power. Which stinks.

  19. Gavin Moodie

    It’s not that the Libs can’t afford to field candidates in rural electorates, it’s that the Coalition parties choose not to compete against each other. First past the post would be most retrograde and I can’t see any justification for introducing it to Australia. Surely the Senate ballot paper gives everyone their chance to vote for their favourite party.

  20. Venise Alstergren

    GAVIN MOODIE: Well selfish little me. I would very much like to vote for the House of Reps candidate, you know, the feeling that I’d had a voice in voting for a PM? I have the misfortune to be a Labor voter whose entire voting life has been living in one of the bluest of the blue-ribbon Liberal seats. Namely Higgins. The seat recently vacated by one Peter Costello?

    The only form of revenge open to me is to turn up at a peak-hour voting time. To grab the Senate voting piece of paper and spend a good half-hour in the cubicle numbering each and every box on the list, from the pits to the best of a bad lot. We had in excess of fifty people vying for a Senate position. Around me are legions of people holding How To Vote Liberal cards and rushing off to play their favourite sport. The sound of grinding teeth is awesome.

    What’s wrong with FPTP voting anyway?

  21. David Hand

    FPTP voting disenfranchises everyone except the two major parties who get large majorities of seats in the chamber with less than 50% of the vote. No voting system is perfect but in my view, FPTP is the worst of them due to its unrepresentativeness.

    In 2001, the Blair Labour government won 403 seats in a 646 seat chamber, 62% of the seats and a majority of 243, with a popular vote less than 41% of votes cast.

    In 2005, Labour’s vote collapsed to 35% but they still won 355 seats with a majority of 66. So in 2005, nearly two thirds of voters voted against a government returned with 55% of the seats.

  22. Gavin Moodie

    Electors in Higgins get plenty of opportunities to vote for a Labor candidate, and I note from the Australian Electoral Commission’s web site that 22,700 voted for the Labor candidate Tony Clark at the last federal election. Some 14,559 voted for the Greens, 1,225 for the independent David Fawcett who supports gay rights, 777 for Family First and of course 42,086 for the Liberals’ Kelly O’Dwyer. That seems to me a reasonable range of candidates, but of course for those who want more there is an obvious option.

  23. 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.

  24. Gavin Moodie

    No one is convinced by being called names.

    My last point was that there was another ‘obvious’ option for those who believe that there aren’t enough candidates in their division to vote for, but apparently it wasn’t obvious enough. If someone wants to increase the range of candidates standing for election they may stand themself or encourage another to nominate.

  25. Venise Alstergren

    You have a terrific sense of humour. What started out on my part from a sour reflection on the present system, leavened with a bit of personal humour at the childish revenge I’ve taken from time to time, has turned to a joyless piece of dross.

    Of course I’ve encouraged others to stand for election. Also I’ve been close to doing it myself. Unfortunately, family considerations precluded me from going further. Now perhaps you could back away and leave me to work out why FPTP voting is anathema to so many people-Alone.


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