Monday, March 03, 2008

Razor gang angst

It's only just begun.

The Finance Minister Mr Tanner has been accused of breaking a commitment not to take the axe to defence spending, previously believed to be off limits to his razor gang which is attempting to find budget savings of $4 billion.

In an interview on the Ten Network’s Meet the Press yesterday Mr Tanner said that defence spending was under review by his committee which wanted to make sure that it did not grow by more than 3 per cent per annum in real terms.

“The pressures in defence spending with the very widespread commitments we've got overseas, whether it's Afghanistan in our region or wherever else, are considerable. So even getting savings to ensure we don't go beyond that 3 per cent real is a very important exercise,” the Minister said.

But Labor’s election promised released late last year promised that defence spending would grow by a minimum of 3 per cent per annum rather than a maximum...

The Opposition defence spokesman Senator Minchin accused Mr Tanner of breaking an election promise.

“The difference for defence in being restricted to 3 per cent growth rather being assured this as a guaranteed minimum could be substantial,” he said.

The Coalition had promised to allow defence spending to grow by 3.5 per cent per annum.

Senator Minchin said the cut would come on top of Labor’s extra 2 per cent efficiency dividend, which he said would cut $500 million from the defence budget over the coming decade.

This was disputed by a spokesman for Mr Tanner who said the extra 2 per cent efficiency dividend applied only to the “non-operational” parts of the defence budget – about 14 per cent of the total. It would be imposed for one year only.

But Senator Minchin responded by pointing to the forward estimates available on the Department of Defence website which identify the cost of the 2 per cent one-off dividend as $490.5 million over ten years.

“It’s called one-off, but it is a permanent reduction in their base,” Senator Minchin told the Canberra Times.

Asked in the interview whether anything would be off limits to his Expenditure Review Committee the Finance Minister replied that he was “not regarding anything as immune”.

“We are not setting anything aside that hasn't in some way been the subject of an election commitment, and saying, well, that's off limits,” he said.