Friday, November 23, 2007

Go on, try to make sense of their costings

Here, or here. A pox on both their houses!

For the election-day paper:

Labor has made an impressive 171 promises during the election campaign, 54 of them being promises to save money.

It says their net cost will be a modest $5 billion compared to the Coalition’s $10.3 billion.

The reconciliation released yesterday takes no account of the tax cuts and other commitments that were factored into the government’s accounts before the campaign began...

Labor’s promises have been audited by a three-person committee made up of a former senior Treasury official Greg Smith, a former senior partner with KPMG John Brown and the editor of the Accounting, Auditing and Accountability Journal Professor James Guthrie.

They have found that Labor’s costings “present a fair estimate of the net financial impact on the federal budget’s underlying cash balance.”

The party has had less luck with the Department of Finance. It reported late yesterday that it had received 36 of labor’s policies too late to cost.

One of Labor’s promises, its $4.7 billion broadband network is claimed by Labor to have no budgetary cost because it will be funded from the future fund.

Of the polices that the department of Finance did cost, it said the promised tax breaks for foreigners who used Australian firms for funds management would cost $505 million instead of the $105 million claimed by the Labor party.

Late yesterday the Treasurer Peter Costello described the difference as a huge hole, providing “400 million reasons why labor can't be trusted”.

But Finance costed some other Labor promises more generously than did Labor itself.

The Coalition concedes that its spending bill is somewhat higher than Labor’s but says it is still on track to achieve budget surpluses of greater than 1 per cent of GDP in each of the next four years.

Labor’s analysis suggests that the Coalition’s surpluses would in fact slip marginally below 1 per cent in the financial year beginning in 2010 - falling to 0.96 per cent.

Labor’s Wayne Swan described the finding as the Coalition’s “$1.1 billion black hole”.

And he said the Coalition had “relied on dubious accounting tricks to give the appearance of meeting its surplus target”, such delaying $398 million of defence spending due in 2010.

The costings suggest that in broad terms there is very little difference in the bills being run up by Labor and the Coalition. Both are targeting a budget surplus of around 1 per cent of GDP in each of the next four years.

This campaign has been the most expensive ever, with each side promising more than $50 billion, including tax cuts.

In the 2004 each side stopped at $13.5 billion.