Reality check. Working one month just to pay for welfare?

It’s the best-remembered phrase of the budget, and it wasn’t even in the budget. Treasurer Joe Hockey used it while selling the budget last week to dramatise Australia’s welfare bill.

“The average working Australian, be they a cleaner, a plumber or a teacher, is working over one month full time each year just to pay for the welfare of another Australian,” he told the Sydney Institute.

The concept is catching on. The Greens say almost half of Hockey’s one month – 11 working days – goes to assistance to the aged. Only 2 days pay for the dole. Another 9 days pay for what the Greens say are tax concessions for well off Australians and fossil fuel industries.

But the calculation is flawed, marred by two mistakes which partly cancel each other out.

The budget papers put this year’s social security and welfare bill at $140.6 billion. Of this around $36 billion goes to families with children, $26 billion goes to help people with disabilities and $10 billion to help the unemployed and the sick. Only around $2 billion goes to help indigenous Australians.

The total does indeed come to near $6000 per head as the treasurer said, but only if all Australians are counted in the population, including those who are too young and too old to work. Limiting the population to workers (Mr Hockey says only 45 per cent of the population pays income tax) the welfare burden per worker is around $13,400.

But that’s way more than one month’s tax...

The latest Tax Office figures show a total of 12.7 million individual Australians paid a total of $144.8 billion in net tax in 2011-12, producing an average tax bill of $11,400 each. Updated for subsequent wage rises the current average individual tax bill would be around $12,200.

Which causes a problem. The welfare burden per worker is greater than the entire year’s tax collected per worker. In the treasurer’s language “the average working Australian, be they a cleaner, a plumber or a teacher” needs to work a bit over 13 months per year to pay for the welfare of others.

Which means something’s wrong.

What’s wrong is the assumption that individual tax is government’s only source of income. This year the government expects to take in from all sources $363.5 billion. Only $164 billion will come from individual tax. Among its other sources of revenue are company tax, petrol, alcohol and tobacco excises, superannuation and fringe benefit taxes and the petroleum and minerals resource rent taxes.

As a proportion of total government revenue (excluding the goods and services tax) the amount the Commonwealth spends on welfare and social assistance will be 45 per cent.

It’s a finding that would only shock someone who didn’t think that welfare was one of the main reasons the government collected revenue.

So where did the Treasurer get his figure?

His office says he calculated the welfare bill at $6000 per head, calculated average monthly income at “around $4,800 to $6,500 per person” and concluded that the average Australian was “working over one month full time each year just to pay for the welfare of another Australian”.

It would be correct if the average tax rate was 100 per cent. But its closer to 20 per cent, meaning the average individual taxpayer would need to work for much longer than one month to pay the welfare bill. Except that the average worker doesn’t need to work that much longer because workers aren’t the government’s only source of revenue. Two mistaken assumptions have partly canceled each other out.

Expect more of this sort of talk. Accompanying each of this year’s tax returns for the first time will be “concise one-page personalised and itemised receipt”. It will show “in dollar terms, how much of a person’s tax bill was spent on each budget area”.

An initiative of the treasurer, it also has the potential to be misleading. Its oddest feature will be the way it treats government debt. Debt will be displayed as a total, rather than an amount per person, and displayed as gross debt rather than net debt. Net debt per person is around $9800;  per taxpayer it’s around $17,200.

In The Age and Sydney Morning Herald


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Half true. What the Electoral Commission says about Senate voting

“The rest of the ballot paper must be left blank”

Australian Electoral Commission, Senate voting instructions

The Australian Electoral Commission says we have “a choice of two methods” when voting for Senators today.

We can either vote “above the line” by putting the number '1' in one box only. That gives whoever we are voting for the right to allocate our preferences.

The AEC says “the rest of the ballot paper must be left blank.”

Or we can vote “below the line” by putting the number '1' in the box of our first choice, then '2' and so on until all the boxes have been numbered.
“If a voter chooses to vote below the line, they must number every box below the line for their vote to count,” its website says.

“The top part of the ballot paper must be left blank.”

If true, it could deprive some of us of our democratic rights.

There’s a record 110 Senate candidates in NSW this time. In Victoria there are a record 97 candidates. Flat magnifying glasses will be issued to help voters with poor eyesight. But mistakes will be inevitable for many people who attempt to vote below the line. Voting above the line instead, for safety, deprives those voters of the right to allocate preferences.

The AEC site makes it look as if there is no way out, but there is. It is technically illegal, and if you only read the words at the top of the AEC site you wouldn't know about it.

Does it stack up?

Drill down further and it becomes apparent that ballot papers filled in both above and below-the-line are counted. The above-the-line vote is used as a backup in case the below-the-line vote fails.

And in below-the-line voting, not every square has to be completed for the vote to count. Up to three errors are allowed so long as 90 per cent of squares are completed.

Finding

There is a way to both attempt to make every preference count and to ensure at least something counts. The ABC's Antony Green recommends it. It's to vote both above and below the line.

The Electoral Commission keeps it quiet because it is technically illegal. But it agrees it works.

Politifact rates its claims that you have “a choice of two methods” and that when using either “the rest of the ballot paper must be left blank” only half true. The Commission is describing the law. But the law also makes voting private and ensures people who disobey those parts it vote have their votes counted. Enjoy the day.

In Politifact and The Sydney Morning Herald

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Mostly False. Under Labor the carbon tax would hit $350 per tonne

"If Labor sneaks back, the carbon tax stays and goes up to $38 a tonne by 2020 and an almost unimaginable $350 a tonne by 2050”

Tony Abbott, National Press Club, September 2, 2013

Could Abbott be right the second time around?

In the lead up to the carbon tax he said its impact on the cost of living would be “almost unimaginable”.

This week at the national press club he said: "If Labor sneaks back, the carbon tax stays and goes up to $38 a tonne by 2020 and an almost unimaginable $350 a tonne by 2050”.

An “almost unimaginable” $350 a tonne?

It’d certainly be a hike from the present $24.15 a tonne, set to slide to around $6 per tonne when Australia moves to a floating European-linked price from mid next year.

Supporting evidence

Abbott’s office sourced the price from modelling by the Australian Treasury. But the Treasury didn’t say $350 per tonne. It said $131 per tonne, a figure it expressed in present dollar than those 37 years into the future.

The Coalition converted it, plugging in the standard rate of inflation to more than double it.

But by then prices in general will have more than doubled. A ticket to the movies will cost $47 if it moves in line with inflation. Everything will seem big. One quarter of the present population will have died.

And the incomes of those alive will have swelled. The same Treasury modelling shows incomes outpacing prices to the extent that they buy 55 per cent more than they do now, even allowing for inflation. It means by then a $131 carbon price would be about as painful as an $85 price now.

But it wouldn't apply to anything like the same range of goods and services. That's the point of the Treasury modelling. It models what would happen by the time there had been an 80 per cent cut in emissions.

Does it stack up?

Dr Frank Jotzo of the ANU’s Centre for Climate Economics and Policy doubts whether the carbon price would ever need to climb that high.

“It is an assumption derived from a modelling analysis, not a forecast,” he says. “The cost of renewable energy
has come down much more rapidly than most people expected.”

Abbott seems to agree. He told the ABC within hours of his launch business was decarbonising quickly.

Finding

A Politifact rating of “mostly false'' applies where a statement contains an element of truth but ignores critical facts that would give a different impression.

PolitiFact rates Abbott’s claim mostly false.

In Politifact and The Sydney Morning Herald

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Mostly False. Asylum seekers and traffic conjestion

Asylum seekers are a "hot topic here because our traffic is overcrowded"

Fiona Scott, Liberal candidate for Lindsay, Monday, September 2, 2013

First, asylum seekers were blamed for jumping queues, now they are blamed for joining them.

Liberal candidate Fiona Scott this week infamously linked asylum seekers to traffic congestion in western Sydney and then to overcrowding in hospitals.

She later said she had been misunderstood. She was merely acknowledging the concerns of other people in suburbs at the foot of the Blue Mountains.

As she told Four Corners: “Go and sit in the emergency department of Nepean Hospital or go and sit on the M4 and people see 50,000 people come in by boat; that's more than twice the population of Glenmore Park where we just were”.

Supporting evidence

Taking up her challenge Politifact took a look at the live traffic camera feed. The M4 isn't pretty.

It also had a quick look at the NSW Health website showing the number of patients waiting in the Nepean Hospital’s emergency department. At 2.40 pm, there were four people waiting.

Of course not all of the 50,000 boat people who have arrived since 2008 have come to Lindsay. The Refugee Council says the suburbs surrounding the Nepean Hospital - Blacktown, Hawkesbury, Penrith and Blue Mountains – took in 161 asylum seekers last year. They hold 618,000 people.

And not all of those asylum seekers drive. Paul Power of the Refugee Council says if anything the electors of Lindsay might have noticed "a modest increase in footpath traffic".

Very modest. Lindsay takes in fewer immigrants than most electorates. Three quarters of its residents were born in Australia, compared with 70 per cent nationally.

But it has taken an especial interest in the subject. In 2007 what the Liberal Party described as some “over enthusiastic” members distributed fake pamphlets purporting to be from an Islamic group urging a vote for Labor. The Liberal Party lost the seat, the members were expelled and Labor took office.

Does it stack up?

In her clarifying remarks, it not to Four Corners itself, Scott was careful to say she was not describing reality, only representing how people in the area felt.

They can make up their own minds on Saturday whether she is a suitable person to do so.

Finding

Politifact rates Scott’s claim mostly false.

In Politifact and The Sydney Morning Herald

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Half true. Paid Parental leave "fully funded"

The Coalition’s parental leave scheme is “fully funded - by abolishing the existing scheme, and importantly by imposing the 1.5 per cent levy on the largest businesses"

Joe Hockey, Q&A ABC television, Monday August 19 2013

There’s little debate about how much the Coalition's paid parental leave scheme would cost. The Parliamentary Budget Office says $5.5 billion per year.

What is in dispute is how it would be paid for. Joe Hockey told Q&A on Monday the scheme would be “fully funded by abolishing the existing scheme, and importantly by imposing the 1.5 per cent levy on the largest businesses.”

Would just those two measures do the trick?

Finance minister Penny Wong says they wouldn’t. The Coalition would need “deeper cuts to families, education, health and jobs”.

Supporting evidence

The Coalition says it has supporting evidence, but it’s keeping it to itself.

It says Parliamentary Budget Office agrees with it, and (on the record) leaves it at that.

On so-called “background” it spells out what it says the PBO has told it, but it won’t release the actual PBO costing as the Greens have done for their maternity policy.

The Coalition finds $2 billion per year by abolishing Labor’s scheme. It finds another $2 billion to $2.5 billion by its tax levy on big firms. That leaves $1.25 billion to $1.5 billion to be found.

And here’s where it gets complicated.

An extra $1 billion or more would come from higher tax collections. Some would come from the mothers getting the payments, the rest would come from investors.

Right now shareholders can claim their share of whatever tax their company pays as a so-called franking credit which they can use to cut their own tax.

They would be unable to do that with the Coalition’s 1.5 per cent levy. Abbott said Wednesday: “Levies just don’t attract franking credits, that’s just a standard rule”. Because the Coalition both plans to cut the company tax rate (in a separate policy) and lift it for big firms, the firms themselves would notice little difference but their shareholders would be worse off.

The Coalition would also save $100 million on Family Tax Benefits as some parents were pushed into higher brackets, another $100 million from no longer separately paying public service maternity benefits, and $200 to $300 million from the states.

It adds up to the required $5.5 billion if the PBO costing says what the Hockey says it does.

Finding

Without seeing the costing Politifact can only rate Hockey’s claim “half true”.

It will review the finding when it sees the costing.

In Politifact and The Sydney Morning Herald

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Mostly false. An average female earner $21,000 better off

"If you are a mother on average earnings you will be $21,000 better off under this policy."

Tony Abbott, Sunday August 18 2013

Tony Abbott says mothers on average earnings will be $21,000 better off under the Coalition.

He is comparing his paid parental leave policy which replaces actual wages (and super contributions) for six months with Labor’s which pays out only at the minimum wage, and only for three months.

But is the difference really as much as $21,000?

Supporting evidence

Abbott’s background papers show how he arrived at the figure. They say the average salary for women who work full-time is $65,000, which is exactly the figure reported by the Bureau of Statistics. If they get six months of that while on leave they will receive $32,500 plus super. Labor will give them around $11,200. The difference is $21,300.

Does it stack up?

Most working women work fewer than 35 hours per week. Roughly half work fewer than 30 hours per week. They take home much less than the average full-time wage. The same ABS document quoted by the Coalition arrives at a much lower figure for average female earnings (incorporating both part time and full-time workers). The average is $44,200 per year.

A mother on that much would get $22,000 plus super under the Coalition’s policy, well short of the $32,500 quoted. She would be nothing like $21,000 better off than under Labor.

And there’s something else. Most women don’t get average earnings. The average is an artifact, pushed up by a few exceptionally high earners at the top (for whom the scheme is capped when earnings hit $150,000). A typical female worker gets 12 per cent less than the average, meaning the Coalition is offering a typical female on maternity leave $19,320 plus super, not that much more than is Labor.

However, there is a saving grace. Abbott’s scheme won’t start for almost two years, until July 2015. By then female wages will be much higher.

Finding

The Coalition's paid parental leave policy offers more than Labor’s, particularly for higher earners. But the gains for a typical women are not as big as Abbott suggests.

A Politifact rating of ''mostly false'' applies where a statement contains an element of truth but ignores critical facts that would give a different impression.

Politifact finds Mr Abbott’s claim that “a mother on average earnings” will be $21,000 better off under his scheme mostly false.

In Politifact and The Sydney Morning Herald

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False. Abbott wants to privatise public schools

"Tony Abbott and Christopher Pyne want to follow Premier Colin Barnett's lead in WA by privatising our public schools.”

Bill Shorten, press release, July 26 2013

If elected the Coalition will be “rolling out independent public schools as our preferred principal autonomy model around Australia,” according to its education spokesman Christopher Pyne. Labor’s Bill Shorten says Abbott and Pyne want to follow Western Australia in “privatising our public schools”.

Could Abbott really be planning to privatise schools?

Supporting evidence

The first point to note is that the schools in question are owned by the states and territories, not the Commonwealth. It can’t sell them because it doesn’t own them. Pyne himself says he hates “central command and control from Canberra”. But he says he will “work with the states and territories to encourage state schools to choose to become independent schools”.

So it wouldn’t be privatisation as such. But would what he is proposing amount to privatisation, where the states agreed to allow their schools to become independent?

How it stacks up

Victoria has had a semi-autonomous school system for many years. Western Australia introduced an option for “Independent Public Schools” in 2010. About one third of the state’s government schools are now partly managed by local boards.

The Oxford dictionary says to “privatise” is to “transfer (a business, industry, or service) from public to private ownership and control”. There would be no transfer of ownership in what the Coalition is suggesting, and only a limited transfer of control.

Kylie Catto, President of Western Australian Council of State School Organisations explains the system like this: “Independent Public Schools are still government schools. The way they operate gives them slightly more autonomy, but they still must comply with the main policies of the Western Australian Department of Education.”

The principal and the board are unable to expel students, for instance. But they are able to hire staff and manage their (government-provided) budgets.

Almost everyone Politifact spoke to said privatisation was the wrong way to describe what the Coalition was proposing. And it carries specific (and often negative) connotations in states such as NSW and Queensland which are actually selling assets. Australian Education Union president Angelo Gavrielatos said the Coalition’s plan was “part of a privatisation agenda”. But he didn’t call it privatisation.

Finding

Politifact finds Shorten’s claim “false”.

With Michael Koziol, in Politifact and The Sydney Morning Herald

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Mostly true. Did Labor push child care numbers past one million?

“As a result of our policies, the number of children in approved child care has grown to more than one million.”

Kate Ellis, early childhood minister, August 7 2013

It’s been a big week for child care. Kevin Rudd kicked off his campaign with a promise of $450 million in extra funding to improve child care centres. His minister Kate Ellis said: “As a result of our policies, the number of children in approved child care has grown to more than one million”.

Is it really Labor’s policies that have driven that growth, or would childcare numbers have got there anyway?

Supporting evidence

The one million figure comes from Child Care in Australia, a report released by the Department of Education, Employment and Workplace Relations this month. It finds the number of children in officially-sanctioned care hit 1,030,970 in September 2012, passing through the one million mark for the first time.

Around 616,000 were in child care centres, 125,000 in family day care, 315,000 in after-school care and the rest in occasional care.

Does it stack up?

In the three years leading up to Labor’s election, child care numbers barely grew - inching ahead a total of 2.8 per cent. In the five years since, child care numbers surged 29.8 per cent. The graph turns up sharply at about the time Labor took office.

But this doesn’t mean that Labor did it. Just before Labor took office John Howard’s brought down a final budget was awash with support for parents using child care. It boosted the benefits paid to the centres, allowed parents to claim two years worth of rebates in one year and introduced real time rebate payments so parents wouldn’t have to wait until the end of each financial year to claim money back through the tax system.

Labor built on Howard’s moves, boosting the size of the rebate from 30 per cent to 50 per cent and allowing more parents to claim it. It introduced fortnightly payments, so parents wouldn’t have to wait until the end of each quarter.

And long-term trends are at play. Sydney University economist Stephen Whelan says for the past quarter century increasing numbers of women have been to returning to work after having children. ANU economist Robert Breunig says it is happening because women are increasingly university-educated and having children later in life.

Coalition child care spokesman Sussan Ley pourscold water on the one million total saying it may include some double-counting, but it is hard to deny that the numbers are going up. Although long-term trends are at play, the actions of this government (as well as those in Howard’s last budget) would have a lot to do with it.

Finding

The Howard government boosted support for child care. Labor supercharged it.

Politifact rates the claim mostly true.

With Ellie Harvey, in Politifact.com.au and The Sydney Morning Herald

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Mostly False. Abbott could create 2 million new jobs

Abolishing the carbon tax, the mining tax and getting productivity up could "produce 1 million new jobs in five years, 2 million new jobs in a decade"

Tony Abbott, August 8 2013, Devonport


Tony Abbott says he has a plan to create jobs.

As he put it on Thursday: “Abolish the carbon tax, abolish the mining tax, get productivity up”.

He said it could “produce 1 million new jobs in five years, 2 million new jobs in a decade”.

Two million is an extraordinarily big number to add to a workforce of 11.6 million. But it has happened before.

Supporting evidence

In fact it’s happening now. Australia has producing new jobs at the rate of 2 million workers per decade since December 2006. The latest figures show the number of Australians in jobs climbed 2.2 million in the decade to July. So it ought to be easy to continue.

But does it stack up?

Population growth should help. Bureau of Statistics projections have Australia's population growing by between 2.7 million and 4.2 million over the next decade.

But it’s not that simple. Although Australia’s total population will keep growing, its working-age population will not. Adelaide University demographer Graeme Hugo says Australia’s working age population is set to peak and stop growing within a decade as baby boomers become retirees and give up work.

It’ll make Tony Abbott’s target of 2 million more people in jobs much harder to achieve than history suggests, perhaps impossible.

(Perversely, it should make it far easier than it used to be for anyone who is of employable age to find a job.)

Except for this. It won’t be Abbott that creates those jobs.

Here’s his Treasury spokesman Joe Hockey three years ago this month, campaigning in the same town - Devonport.

“Governments don’t create jobs, business creates jobs. Employers employ people, not governments.”

He could have added that demography - especially immigration - has a lot to do with it too.

Abbott is wrong to say that his “economic plan can produce 1 million new jobs in five years, 2 million new jobs in a decade”.

Most of those jobs would be created anyway, even without his economic plan. And changing demographics will make that difficult.

Finding

Politifact rates the claim “mostly false”

Politifact and The Sydney Morning Herald

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True. Treasury thinks cutting company tax helps workers

"Treasury believes if you reduce company tax, you increase pay, you increase GDP and you increase employment."

Tony Abbott, press conference Wednesday August 7

To hear Tony Abbott speak, you would think a cut in the company tax rate was good for workers. He is promising to cut the rate from 30 per cent to 28.5 per cent per cent in mid 2015.

“Go back and look at the papers that the government released as part of the Henry tax review,” he said on Wednesday. “And you will see that Treasury believes if you reduce company tax, you increase pay, you increase GDP and you increase employment”

Supporting evidence

The Treasury itself has been silent on the question. But at the 2011 business tax summit its former head Ken Henry left those present in no doubt about his toughts.

At issue was the “incidence” of company tax. Did it fall on the owners of the companies or on their workers.

“In the case of a relatively small, open economy like ours, there is simply no debate in the academic community,” he said. “There is a strong consensus among tax academics that the incidence of the tax falls predominantly on labour.”

It’s a hard proposition to get your head around. The argument is that businesses have a choice about where they invest. The lower Australia’s company tax rate, the more likely it is that they will invest here. Those arriving or staying will employ workers and spend money putting up buildings and buying equipment, each dollar of which will make the workers they do employ more valuable, and more worth paying higher wages to keep.

But does it stack up?

The studies cited in the the Henry tax report do find such an effect, but it is far from complete. In the short term a move in the company tax rate appears to move wages little. In the longer term a 10 per cent adjustment in the company tax rate appears to move wages 7 per cent.

Abbott pointed to modelling prepared for the government which finds that “every 1 per cent cut in the company tax will boost jobs by about 10,000”.

The modelling itself refers to it less grandly: “A small increase in labour supply of around 0.1 per cent”.

But on receiving the Henry report Kevin Rudd was convinced. He promised to cut the company tax rate to 28 per cent, only to have the Coalition block the cut in the Senate because it was to be funded by the mining tax.

Finding

Abbott is probably right about what the Treasury thinks. Whether the likely gains in wages and jobs are worth the expense is another question.

Politifact rates the claim ‘true’.

In Politifact and The Sydney Morning Herald

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False. Rudd and Abbott on the cost of living

Australian families are “all struggling from cost of living pressures”

Kevin Rudd, media conference August 5 2013

“For the average family in Australia today, costs are going up and up and up.”

Tony Abbott, media conference August 6 2013


Anyone would think our cost of living spiraling out of control.

Kevin Rudd used the phrase “cost of living” an extraordinary 14 times in his press conference Monday. On Tuesday Tony Abbott used it four times. Abbott spoke of “cost of living pressures”, which would mean that not only was the cost of living “going up and up and up”(his words) but that it was going up faster than household income. Kevin Rudd’s claim was universal. He said Australian families were “all struggling from cost of living pressures”.

Supporting evidence

Rudd mentioned childcare. Abbott mentioned electricity and gas. Electricity prices have climbed 17 per cent in the past year, gas prices 15 per cent. The government credits the carbon price with 10 and 9 per cent of those increases. The cost of childcare climbed 7 per cent.

Does it stack up?

If that was all you noticed, you would feel squeezed.

But the consumer price index also records that the price of food has climbed an unusually low 1.1 per cent in the past year, and the price of petrol has slipped 3 per cent.

Taken together it doesn’t point to a squeeze. The overall consumer price index climbed 2.4 per cent, including the carbon price. The typical pay packet climbed 3.1 per cent, NewStart climbed by less, and both were boosted further by carbon tax compensation.

Or course not all households are the same. The Bureau of Statistics says the costs facing aged pensioners climbed 2.6 per cent. The costs facing welfare beneficiaries climbed 2.5 per cent, and those facing employees climbed a very low 1.4 per cent.

Lower mortgage repayment costs are are part of the story for working Australians. In the past year the standard variable rate has slid from 6.85 per cent to 5.95 per cent.

Australians wanting to complain about longer-term trends will get no support from an AMP National Centre for Economic Modelling study released last May. It finds the average family is ahead by $224 per week compared to 1984. Low income households are $93 per week better off.

But AMP financial services managing director Craig Meller says we don’t feel that way perhaps because we are listening to our aspirational selves “telling us we need more”.

Finding

Kevin Rudd and Tony Abbott are telling us what we want to hear. Politifact rates both of their claims taken together “false”.

In Politifact and The Sydney Morning Herald

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Half true. Governor worried, rates not at emergency lows

"Remember the Reserve Bank said that 3 per cent or the Government said that 3 per cent was emergency levels. So, if the Reserve Bank keeps cutting beyond that, understand this - it's because they're worried about the Australian economy."

Joe Hockey, August 5, 2013

Once our politicians boasted about “keeping interest rates low”. In 2004 the former prime minister John Howard campaigned from a lectern emblazoned with those words. Even on Tuesday shadow treasurer Joe Hockey promised that on average, interest rates would always be lower under the Coalition.

But he said on Monday that if the Reserve Bank did cut, it was “because the economy is deteriorating”.

The statement about the cash rate we are checking is this one: "The government said that 3 per cent was emergency levels. So if the Reserve Bank keeps cutting beyond that, understand this - it's because they are worried about the Australian economy."

Supporting evidence

Joe Hockey says that during the 2009 global financial crisis the cash rate was 3 per cent. The Treasurer Wayne Swan said at the time rates were at “emergency levels”. The cash rate is now much lower, at 2.5 per cent.

Does it stack up?

Reserve Bank governor Glenn Stevens doesn’t think he faces an emergency. He told a parliamentary committee in February his cash rate was near 2009 levels “not because we face an emergency like we did back then, but because we face some other forces of a more slowly evolving nature.”

And he explained in two speeches last year that he targets retail rates, not the cash rate.

As he put it: “They are the rates that matter, they are the rates that do the work in the economy, and we are trying to calibrate what we do to get what we think are the right levels for those.”

In his estimation retail rates are 1.5 percentage points higher than they used to be relative to the cash rate. So he has to cut the cash rate further.

In his words: “The normal level of the cash rate is lower than it otherwise would have been, a 3 per cent cash rate today is not the same as a 3 per cent cash rate in the past.”

Joe Hockey is right to say Governor Stevens is cutting rates because he is worried about the economy. But he is wrong to suggest the rates he is targeting are yet at emergency lows.

Finding

Politifact rates the claim “half true”.

In Politifact and The Sydney Morning Herald

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Half true. Bureaucracy has pushed up child care fees 22 per cent

Adding bureaucracy such as child care centre ratings "has pushed your fees up 22 per cent in two years"

Coalition childcare spokesman Sussan Ley, May 1 2013

The Coalition’s childcare spokesman Susan Ley blames bureaucracy for rising childcare fees. And she is specific. She says added requirements such as those needed to put childcare centre ratings on the MyChild website has “pushed your fees up 22 per cent in two years”.

Supporting evidence

When shown the claim on Ms Ley’s website her staff pointed to the Bureau of Statistics measure of childcare costs in the consumer price index.

It shows childcare costs have climbed 18 per cent in the past two years, not 22 per cent. Her staff then said they based the claim on a parliamentary library paper that found an 23.7 per cent jump between the September 2010 and June 2013 quarters. There was such a jump, but it was over almost three years, not the claimed two.

Does it stack up?

Ms Ley’s claim is not merely that childcare fees have climbed 22 per cent, but that they have climbed 22 per cent because of bureaucracy such as the “new childcare centre ratings now being posted on the Government’s mychild website”.

In the past two years wage costs have climbed 7 per cent. In the period in which the childcare price index has climbed 23.7 per cent wage costs have climbed 10 per cent. As as Ms Ley’s leader Tony Abbott pointed out on Monday, electricity prices have soared. In the period in which the childcare index climbed 23.7 per cent, electricity prices jumped 27 per cent.

So there’s more to rising fees than added bureaucracy.

And fees after rebates (which is what the Bureau measures) are much lower than they used to be. In 2007 during the final year of the Coalition government childcare fees after rebates were 22 per cent higher than they are now. Increasingly generous rebates, lifted towards the end Howard’s last term and made more generous in Rudd’s first term, have pushed childcare costs back to where they were in 2005. That’s what the ABS figures identified by Ms Ley’s office show.

Ms Ley’s office says the centres she has visited have told her the new requirements are pushing up costs. Some have had to hire more staff. It’s anecdotal evidence and hard to quantify.

Finding

Politifact rates the Coalition’s claim that increased bureaucracy pushed childcare fees up 22 per cent in two years “half true”.

With Ellie Harvey, in Politifact and The Sydney Morning Herald

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False. The Coalition would need to make $70 billion of cuts

"The coalition, to return the federal budget to as a good a position as the government’s, at minimum, would have to make $70 billion worth of cuts."

Penny Wong, finance minister, August 3 press conference

Labor’s finance spokesman Penny Wong says the Coalition would have to cut the budget by $70 billion to pay for its election promises so far. Kevin Rudd used the same number announcing the poll on Sunday.

Labor backs it up with an eight-page document that goes line by line through what it says are the 19 Coalition promises announced so far. But the biggest ($19.7 billion) isn’t a promise at all. Labor calls it "2010 savings no longer available to offset policies". In its words: "To fund policies announced in the 2010 election the opposition put forward a number of savings. However, many of these savings are no longer available."

Some of those savings are no longer available because the timeframe has passed, others because they were promises to abolish programs that Labor has since abandoned.

Does it stack up?

It is hard to see why a historical footnote about costings in a previous election should be regarded as a cost to be added to a claimed $50 billion of costs for policies the opposition is actually proposing this time.

Joe Hockey says its "double counting".

Wong’s office defends including the figure by saying Hockey has regularly referred to the old savings target. But he isn’t referring to it now. In recent days he has merely promised to deliver a better bottom line than Labor.

Which means the actual cost of coalition policies would be nearer to $50 billion to $70 billion, and that’s if Labor’s other costings are accurate.

Not all of them are.

Labor has costed Tony Abbott’s promise to lose 12,000 public servants through natural attrition over next two years. It says it’ll only save $2.8 billion. Joe Hockey’s office has shared with Politifact a costing from the independent Parliamentary Budget Office that finds the saving is more like $4.8 billion.

And some of Labor’s estimates are guesses. The Coalition hasn’t yet released its Dams and Water Management policy. Labor says it will cost $2 billion.

Finding

The Coalition will need to find a lot of money to pay for its promises so far. Abolishing the carbon price is just one of them. But Politifact finds Labor’s claim it would need to find $70 billion, based on what we know so far, “false”.

In Politifact and The Sydney Morning Herald

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Wong's costing:





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"Mostly False" Fact-checking the Coaltion's carbon tax costing

Moving immediately to a floating carbon price would result in “a black hole of up to $15 billion in the budget”.

- Joe Hockey, shadow treasurer, Friday June 28, 2013, on Channel 7 Sunrise

Now at $24.15 a tonne, Australia’s carbon price was not set to plummet to the European price (currently $6 a tonne) until July 1 2015 - when Australia moved to a floating price linked to Europe’s emissions trading scheme.

Amid speculation that Labor might move earlier to the floating price, the shadow treasurer Joe Hockey said such a re-scheduling would leave the budget up to $15 billion worse off because the current fixed price would be replaced sooner by a substantially lower floating price.

“The fact that they say they are going to abolish it [the fixed price] means they are going to have a black hole of up to $15 billion in the Budget,” Hockey told Channel Seven’s Sunrise on June 28..

The figure came from the Coalition’s climate change spokesman Greg Hunt.

It’s a big number. Hunt put it this way in a press release issued on July 1 2013: “The change could have a $15 billion impact on the government’s revenue over the forward estimates based on the current EU price.”

“Forward estimates” is budget terminology for the current financial year plus the next three. So neither Hockey nor Hunt is suggesting up to $15 billion would be lost in one year. In this case, it would be lost over two years - the current financial year and 2014-15, because the fixed carbon price was never due to exist beyond July 1 2015 in any event.

Greg Hunt’s office says it arrived at the $15 billion black hole number using Table 3.2.7 of the Clean Energy Regulator’s budget statement...

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The table shows the government expecting to receive $8.34 billion from the carbon tax this financial year (when the carbon price will be $24.1 a tonne) and $9.27 billion next financial year (when the carbon price is scheduled to reach a fixed $25.40 a tonne).

If, instead, the fixed price was scrapped early and replaced with a floating carbon price of, say, $6.50 a tonne, the government’s carbon price receipts would plummet by $6.1 billion this financial year and $6.9 billion the next, according to the Hunt office reckoning.

That’s a forecast cut of nearly $13 billion – not quite the $15 billion claimed by the Opposition but a substantial shortfall all the same.

But is the $13 billion number correct?

Not in terms of the impact on the budget, it’s not.

Those $8.34 billion and $9.27 billion taxation figures apply to gross income from the sale of carbon permits. The net income figures, listed on the same table three lines below as “total taxation revenue”, are much lower.

What’s the difference? Somewhere between 40 per cent and 50 per cent of the permits are given away for free. (Their value is indicated in brackets, right below the gross figure relied on by Hunt and Hockey). The gross figure is notional. A huge chunk of it will never be received.

And what won’t be received can’t be lost.

Table 7 of Budget Statement 5 outlines what the government expects to actually receive. Reproduced below, it is nominated in “cash” terms that feed into the commonly quoted measure of the budget surplus or deficit, rather than the accrual terms used in the document relied on by the Coalition.



It shows the government was expecting carbon permits to net it $6.26 billion this financial year and $6.39 billion the next.

Moving straight to the current European carbon price of $6 a tonne this year and the projected European price of $6.15 next year would cost the budget $4.7 billion this financial year and $4.8 billion the next - a total of $9.5 billion.

And it’s an upper estimate. The lower carbon price would cut costs for some of the businesses directly and indirectly paying the carbon tax, those that have been unable to pass it on. With lower costs should come higher profits, boosting the budget’s company tax takings.

Estimates by the Australian Industry Group suggest the government would rake in an extra $800 million a year as a result of moving earlier to the lower European carbon price, making the likely hit to budget from an immediate floating of the carbon price nearer to $8 billion.

If the government brings foward the floating carbon price to July next next year, as it now says it plans to, the cost to the budget would be around $4 billion.

Politifact ruling:

Joe Hockey says that moving quickly to a floating carbon price would mean a budget black hole of up to $15 billion. The hole would be likely to be nearer $8 billion if the change was immediate, and would be nearer $4 billion if it happened in one year's time.

It’s a big cost, but well short of $15 billion.

We rate the statement "Mostly False"

In Politifact, The Canberra Times, The Sydney Morning Herald and The Age


Sources:

Joe Hockey transcript, Sunrise, June 28, 2013

Greg Hunt press release, July 1, 2013

Wendy Black, Greg Hunt’s office. Email exchange, July 9 and 10

Tony Ritchie, Joe Hockey’s office. Email exchange, July 10

2013-14 Commonwealth Budget, Statement 5, table 7

Clean Energy Regulator, 2013-14 Budget statement, tables 3.2.7 and 3.2.9

Frank Jotso, ANU. Phone interview and email exchange, July 9 and 10

John Connor, Climate Institute. Phone interview, July 10

Gemma Williams, Australian Industry Group. Email exchange, July 10



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