Thursday, November 01, 2007

Labor passes its first financial test

The Labor machine has passed its first financial test, with flying colours. Its tax plan, submitted to the Treasury for costing on Tuesday, was returned to it yesterday, costed at slightly less than it was claiming.

When Labor unveiled its plan on the eve of the Leaders’ debate two weeks ago it had said that by adopting the Coalition’s plan but delaying until beyond 2010 its cut in the top rate for Australians earning more than $180,000 it would save $3 billion.

In fact the Treasury has found it will save $3.150 billion in the forward estimates period – and extra $150 million - allowing Labor to claim that its costings have been more than endorsed by the independent umpire..

The Tax costing is the only one completed by the Departments of Treasury and Finance so far.

Awaiting costing are Labor’s Education Tax Rebate, also submitted to it on Tuesday and other policies submitted earlier dealing with education, forestry and cuts to spending in the Department of Foreign Affairs and Trade and on MPs printing allowances..

Labor has promised to keep the net cost of its spending promises to zero, foreshadowing a reconciliation to be released in the last week of the campaign.

The commitment does not apply to tax promises and arguably may not apply to Labor’s Education Tax Rebate and Childcare Rebate which it could claim are spending promises delivered through the tax system.

Published information suggests that so far Labor’s spending promises far exceed its promised spending cuts. On Wednesday the Finance Minister Nick Minchin claimed that Labor’s promises amounted to $6 billion.

Labor’s Finance spokesman Linsday Tanner ridiculed that claim yesterday saying that in April the Minister had claimed the total was $20.1 billion; in August that it was $14.2 billion; and at the start of October that it was $17 billion.

“Labor are fiscal conservatives and we are serious about finding savings to fund our election commitments and put downward pressure on interest rates,” he said.

“Senator Minchin is welcome to attack Labor for investigating possible savings and Labor will be announcing more.”

Independent tallies put the Coalition and Labor neck and neck, each promising around $44 billion since the campaign began, with perhaps another $10 billion each before that.

Those totals would bring the total offered per voter up to $3,000, making this by far the most expensive election campaign in Australian history.

The last campaign, in 2004 produced promises worth only $1,000 per voter.

Yesterday both sides stole from each other. Labor announced its own version of the Coalition's pensions and carers’ policy and Coalition copied labor’s plan for super health clinics.

Mr Rudd denied that his $4.138.9 billion plan was a copy of the Coalition’s $4 billion plan saying he had been “working on this for a very long time”.

Among the add-ons was a $15 million Seniors’ Internet Fund to set up free internet kiosks in locations frequented by senior citizens.