Friday, October 19, 2007


Remember: “Where’s the money coming from?”

Along with Skippy the Bush Kangaroo, black and white television and sunburn before the invention of sunblock it was one of the givens of growing up in Australia in the 1960s and 1970’s.

Each election the Opposition would promise something we might actually want, and in reply, with all the seriousness he could muster the Prime Minister or the Treasurer of the day would intone: “Where’s the money coming from?”

Occasionally it was the other way around. When Labor introduced Medibank and later Medicare from government, it was the Opposition that asked “Where’s the money coming from?”

But just at the moment, with Australia in the midst of the biggest influx of money since the Korean wool boom it is a question there is no need to ask...

In just the five months since the May Budget the government has received an extra $59 billion it didn’t expect. In those months it has spent $12.6 billion of it in pre-campaign giveaways and on Monday promised to spend another $34 billion in tax cuts.

That still leaves it with billions to spend on election promises in addtion to the $4 billion already budgeted for but not yet revealed, described in Monday’s Budget update document as "decisions taken but not yet announced".

Is the money really there? Yes. Is it responsible to spend it? No, but both parties have said they are prepared to so long as the Budget remains around $11,000 billion in suplus, which it easily will.

Kevin Rudd may be “an economic conservative” as he tells us on his television ads, but when it comes to spending rather than saving the government’s resources boom windfall, there is as he also says “not a slither of light” between him and John Howard.

In the first week of the campaign proper the spending promises have been roughly matched. Labor has promised $3.264 billion including funding for extra nurses, family friendly workplaces and the battle gainst cane toads plus Friday’s $33.7 billion package made up of the bulk of the Coalition’s tax cuts, an Education Tax Benefit worth $2.3 billion and incentive payments for hospitals to cut elective surgery waiting lists worth $400 million.

Labor’s spending total on day six: $36.964 billion over four years.

The Coalition has promised $1.118 billion including funding for a Royal Flying Doctor Service base and for closed circuit TV cameras in Western Sydney plus Monday’s $34 billion tax package.

The Coalition’s spending total on day six: $35.118 billion over four years.

But day-by-day totals are misleading. Many of the announcements are in fact reannouncements or more detailed announcements about money already commited.

For both sides. The Government’s road and rail announcements are coming from money already set aside for AUSLINK. Labor’s electorate by electorate health and transport announcments are coming out of bigger commitments laready announced.

Labor’s Finance Spokesperson Lindsay Tanner has told the Canberra Times to ignore Labor’s electorate by electorate announcements in these areas when totalling up spending.

As well, Labor has guaranteed that all of its spending commitments (but not its tax commitments) will be covered by spending savings. It is well behind at the moment, with spending promises outstripping announced savings, but Tanner says things will even up by the last week of the campaign when a full reconcilliation will be published showing that the net cost of its spending promises as zero.

The Labor Finance Spookesman has warned journalists against attempting to publish on the run reconcilliations as the Canberra Times is doing today, saying “This stuff morphs and wobbles all over the place all of the time.”

And to the day-to-day campaign totals have to be added all the commitments each side entered into before the election. Labor has promised $11.8 billion since the May Budget (plus somewhat less than $1 billion before that including $500 million for a green car innovation fund) offset by $3.3 billion of promised spending cuts and revenue measures.

But in bizzare illustraiton of the complexities of costing and the toughness with which the game is played, the Coaltion has quietly stolen most of Labor’s $3.3 billion spending offsets.

Just before Australia went into caretaker mode on Wednesday the Finance Minister Senator Minchin adopted Labor’s plan to beef up the Tax Office’s enforcement unit in order to rake in an extra $1.6 billion over three years.

He also imposed a 1.25 per cent annual "efficiency dividend" on Federal Government department, that he said matched the $450 million labor had promised to save by cutting spending on consultants and recruitment agents.

The Coalition’s $8.6 billion of promises entered into before the campaign are arguably not campaign promises at all.

They are included as spending in the updated budget statement, many of them will be honoured by Labor, and some of the money will be spent before Australians vote.

The $1 million Mr Howard promised to fund this year’s inaugural Sydney Christmas is an example. The parade will take place on Sunday November 26, the day after the election. It is not so much a campaign spending promise as an allocation already made.

The spending totals are head to keep track of - and the parties like it that way. The Coalition’s Senator Minchin releases a tally of Labor promises only, replete with double counting.

Labor’s Lindsay Tanner says he is keeping a close count, but he won’t let us see it until polling day eve.


Tax package:

Coalition: $34 billion Labor: $33.7 billion

Other promises since Sunday:

Coalition: $1.118 billion Labor: $3.264 billion

Promises before the campaign:

Coalition: $8.6 billion Labor: $11.8 billion


Coalition: $43.718 billion Labor: $48.764