Friday, August 6, 2010

REALITY CHECK: Big promises, small costings

THE Coalition's health policy takes the four-year cost of its promises of new spending and tax cuts to at least $32.5 billion. Yet less than 1 per cent of that has been submitted to the Finance Department and Treasury for costing.

With just a week left before the deadline for submitting campaign promises for official costing, it looks unlikely that the Coalition will be able to prove its claim that it will reduce the budget deficit (or lift the surplus).

While its new spending would be offset by savings and new taxes that the Coalition estimates will reap $37.7 billion, only 15 per cent of the savings and tax rises have been submitted to be officially costed.

Key policies released earlier this year have still not been submitted for costing. They include:

The proposed two-year freeze on hiring for the public service, which Tony Abbott announced in his budget reply (claimed saving: $3.8 billion).

The interest saved by not building the National Broadband Network ($2.4 billion).

The climate change policy that Mr Abbott announced in January ($2.05 billion).

The education tax refund announced two weeks ago ($734 billion).

Also yet to be costed are the big-spending policies and savings the Coalition has released in recent days.

They include $8.8 billion in just two years for paid parental leave, the $2.55 billion for one year of company tax cuts, and almost $6 billion over four years in new or repackaged health spending.

Shadow finance minister Andrew Robb said yesterday the Coalition had "submitted a large body of work to our independent accounting group" a week ago, and was still waiting to hear back.

"As they work through programs, we are then submitting them to Treasury," Mr Robb said. "We will demonstrate that on the savings side and on the spending side, that we can produce a stronger surplus."

But so far the Coalition has sent the Finance Department just six new spending programs, totalling $288 million, or less than 1 per cent of the new spending and tax cuts it has pledged.

It has submitted 34 proposed savings measures adding up to $5.7 billion. But all were measures the department had recently costed, or were patently obvious.

For example, the Coalition asked the department the cost of giving the Productivity Commission an extra $4 million a year. Yesterday the department replied poker-faced that it would cost $4 million a year.

Labor by contrast has run a low-key campaign with relatively little new spending. As of yesterday, it had announced $2.1 billion of new spending, offset by $2 billion of savings measures. Half the spending promises and virtually all the savings had been sent off for costing.

Labor similarly delayed submitting most of its costings until the final week of the 2007 election. It had also submitted only 32 policies for costing at this stage. As a result, most of its savings and spending plans were never costed.