Deal won't break the bank

WITH the fiscal cupboard almost bare, how can Labor really afford to spend an extra $10 billion on regional Australia? And will it be spent on good projects, or electoral pork?

Beware of spin: this is far less than it sounds. Most of that money will simply be allocated from programs already budgeted for and already earmarked for regions.

Essentially, this deal promises to:

Raid the funds set up by Peter Costello to finance future health and education infrastructure, taking up to $2.3 billion to invest in regional health and education facilities.

No doubt country centres have many worthy contenders for those projects: moving the rundown University of Ballarat into the heart of its city would be high on my list . But Labor needs a long-term plan to refill the funds it is draining.

Guarantee regional Australia defined as all of Australia outside the built-up suburbs of the 10 "major cities" a third of new investments in programs to upgrade primary health care, skills and schools.

That's in line with its population, so no one can complain about that. And it suits Labor's deal with Andrew Wilkie that Hobart is not one of the 10 cities excluded.

Set up an $800 million fund for "priority regional infrastructure". That's a worry, given that we've seen that Labor's priorities for regional funding are where it has seats to protect. Hopefully, Rob Oakeshott as minister might bring more integrity to the process.

Promise the same broadband prices, at least from the national broadband network to suppliers, for all Australians wherever they live.

That's a big one, and no wonder Tony Windsor was happy. It's the same rule we've had for yonks for local phone calls and postage stamps. But this will be a serious subsidy, paid for by broadband users in the cities.

But little of all this actually impacts on the budget bottom line: only $763 million of new spending over the next four years. That will be paid for by postponing the promised tax break on interest from bank deposits so it starts only in 2013. There's another $362 million of new spending after 2014, and $1.02 billion which has various "ifs" attached to it, to ensure it's not wasted. But most of the $10 billion are old promises recycled. They won't break us.