Thursday, August 05, 2010

Proof Labor is making up its policies as it goes along

Normally every government policy costing sent to Finance and Treasury for election costing gets a pass. Why? Because, being the government, it has already got Finance and Treasury to cost it.

The Opposition has no such advantage and will almost inevitably find its costings rubbished by Finance and Treasury.

Except this time. See below from Tim Colebatch in today's Age.

Labor's cash-for-clunkers policy looks as if it was drawn up after the election was called.

It seems to be making them up as it goes along!

Read and weep for what has happened to Labor's alleged competence:

Cash-for-old-cars policy $35m over budget

LABOR'S cash-for-clunkers policy has had another breakdown. The Department of Finance estimates it would cost $35 million more than Labor told us.

The department's costing finds the much-ridiculed policy would cost $429 million, for a goal of reducing greenhouse emissions by 1 million tonnes.

At its release, Prime Minister Julia Gillard said cash for clunkers would cost $394 million. But the department found two serious flaws in Labor's costing.

On one hand, it said, Labor overestimated the cost of administering the scheme. But on the other, the fine print showed Labor costed it assuming that only 180,000 motorists would trade in their pre-1995 cars for new fuel-efficient ones - not the 200,000 it announced publicly.

The department instead assumed the target would be met. But it estimated that up to 165,000 of the cars traded in would be ones that were ''(at) the end of their useful life and need to be replaced'' - so their owners would need a new car anyway. It forecast conservatively that only 35,000 of the clunkers would still have ''useful life'' in them - making it a very costly policy.

Shadow finance minister Andrew Robb accused Labor of pricing the scheme too low, saying the $2000 rebate was too low to induce owners to trade in their cars.

Photo: Andrew Meares

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