Wednesday, November 21, 2007

Tanner reveals the razor

Labor is to slash the budget of nearly every public service by 2 per cent if elected as part of a one-off measure designed to help it save $10 billion and fund its spending promises.

The 2 per cent increase in the government’s so-called efficiency dividend announced late yesterday would take it from 1.25 per cent to 3.25 per cent for one year only.

Exempted from the impost would be departments and agencies affected by other Labor cutbacks including Employment and Workplace Relations, the National Capital Authority and the Australian Securities and Investments Commission. The operational areas of Defence would also be exempt...

Labor’s Finance spokesman Lindsay Tanner told the Canberra Times he expected the increased $1.5 billion dividend to be affordable, with most of it coming from reduced spending on advertising, consultancies, recruitment, market research and media monitoring in accordance with Labor’s new priorities.

However he could rule out redundancies. “Current vacancy rates, turnover and attrition” would help but when asked whether he could guarantee that no public redundancies would result Mr Tanner replied “we say we believe there will be no need for redundancies”.

A virtual freeze on net new public service hirings would slow the ACT’s economy dramatically, while allowing the real estate market to come back into balance putting downward pressure on rents and house prices.

Mr Tanner has also been given the task of running the razor gang promised by the Labor leader should he win office, cutting deeper into what Mr Rudd described yesterday as a “bloated” public service administration.

Other programs to be axed by Labor include continuing work on the government’s stalled Access Card (saving $933 million) the “bloated WorkChoices bureaucracy" saving $258 million.

Labor’s plan to increase funding for the tax office by $179 million over four years in order to gather an extra $740 million largely from large businesses and high wealth individuals received a partial tick from the Department of Finance late yesterday. It costed the payoff at $708 million.

Labor has now submitted all of its $10 billion in planned savings to the Finance Department for costing, although many may have arrived too late. It says on its website that it only guarantees to cost proposals received by 5.30pm last Thursday.

At the start of the campaign Mr Tanner pledged that all of Labor’s spending promises would be completely offset by savings to be revealed during the last week of the campaign. He stressed that the pledge did not apply to Labor’s tens of billions of tax promises.

Asked by the Canberra Times last night whether he had in fact been able to fully offset all of Labor’s spending promises he paused and replied, “no further comment”.

Labor’s $10 billion in promised savings covering about $12 billion of spending contrasts with the Coalition’s $12 billion of spending promises most of which are not offset.