Wednesday, April 18, 2007

It is not so much how much you spend, it is what you spend it on.

UPDATE: The Industry Minister announced some indefensible spending today.

So Australia's Finance Minister says Labor is racking up $147 million worth of promises a day. Senator Minchin is keeping count, and perhaps a bit more seriously than he did when the Prime Minister announced $10 billion of spending on Australia day without having it properly costed by his department.

In compiling the list of 23 Labor spending promises the Minister has done us a favour. He has enabled us to cast an eye over what really maters, which as the Treasury Secretary Ken Henry is at pains to point out is not how much money is spent, but what it is spent on.

In his address to Treasury staff leaked this month Dr Henry said that what was important was spending built productive capacity. Money spent “creating jobs” by moving resources from one part of the economy to another was money wasted.

On that criteria Labor’s 23 spending promises appear to stack up extraordinarily well. There are plans to pipe, recycle and desalinate water, plans to encourage Australians study and teach maths and science and plans to boost early childhood education. Kevin Rudd made the point yesterday that the rate of return on investments in early child development is believed to be as high as 10 to 1...

It is hard to find in the Labor promises collected by the Senator spending that clearly fails Dr Henry’s test, although its $500 million “green car partnership” with Australian carmakers probably comes close.

Senator Minchin is to be commended for keeping count. I am looking forward to the next update, and for an update on Coalition promises. It is shaping up to be an election like no other.