Don’t look now, but there’s another hole in the Coalition’s numbers. But don’t worry, it’s only $4 billion. “Finding savings is a big task but we’re up for it and will release all our costings in good time for the next election,” Tony Abbott declared at the Press Club on Tuesday. He went on to say:
“Not proceeding with the carbon tax would deliver $31 billion in savings over the forward estimates period with a net improvement of $4 billion in the budget bottom line.”
The $31 billion figure, of course, is what will be spent by way of free permits and compensation under the scheme; Abbott failed to note that not proceeding with the carbon tax would also lose about $27 billion in revenue, but no matter.
But his numbers are now wrong. The net cost of $4 billion was revised back to $3.3 billion in MYEFO, which adjusted the costs of household compensation and, crucially, shifted even more expenditure associated with the package into this financial year as part of Wayne Swan’s pea-and-thimble trick to shore up next year’s surplus.
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As a result, there’s a net $3.3 billion in savings only from the carbon pricing package over the forward estimates, not $4 billion. And $3.1 billion of that is being spent this year. So Abbott’s $4 billion in savings is actually $3.3 billion and only available if somehow he gets into office before June 30 and halts compensation payments.
In fact even if the Coalition wins an election held in the second half of 2013, it won’t be able to save a single cent, because the net spending associated with the carbon pricing package will have been completed by the time the Coalition could repeal it — assuming they could do so without a double dissolution election, before July 2014. And that’s actually the point where the carbon pricing package starts returning money to the budget, rather than costing money.
The funny thing is, Abbott continues to call the carbon pricing package a tax but in the same sentence says that repealing it would save the government money — unlike any other tax in history.
Of course, if he’d picked up the excellent point made by South Australian senator Simon Birmingham about why the government continues to refuse to reveal the fiscal implications of the package beyond the forward estimates, when it did the same for the CPRS out to 2020, he’d have been on much safer ground.