Coalition: aid cuts to pay for infrastructure

Joe Hockey and Andrew Robb finally announced the Coalition costings, after the advertising blackout. AAP/David Crosling

The Coalition would slash Australia’s foreign aid program by a massive $4.5 billion over the forward estimates, to finance its nearly $5 billion infrastructure plan to build roads, bridges and freight rail.

Finally releasing the opposition costings today, shadow treasurer Joe Hockey and finance spokesman Andrew Robb said that it was “unsustainable to continue massive projected growth in foreign aid funding whilst the Australian economy continues at below trend growth.”

The costings, done by the Parliamentary Budget Office and ticked off by an eminent persons panel, would improve the budget line by $6 billion over the four years and reduce government debt by $16 billion.

The Coalition, however, won’t lock itself into the timing for getting the budget back to surplus because it says it is doubtful about the economic figures it would inherit.

The costings add another $9 billion in savings to the previously announced more than $31 billion. Together with adjustments for interest saved on reduced debt, the Coalition savings total $42 billion in fiscal terms.

Deputy Prime Minister Anthony Albanese said these “were not costings” and the whole exercise was a “farce”. Within minutes of the opposition press conference finishing, the government claimed to have found a small hole in the numbers.

The opposition timed its announcement for just after the Prime Minister’s address to the National Press Club so he could not use the forum to criticise the costings’ detail.

World Vision’s Tim Costello, speaking from St Petersburg, said he was “devastated” by the slashing of foreign aid. He said Australia was one of the few countries with a growing economy and already had real cuts to the aid budget. The Coalition policy would take aid down from the present 0.37% of GNI, he said.

But Hockey and Robb said Australia needed a stronger economy now, so that it could be more generous in the future.

The Coalition remained committed to the Millennium Development goal to 0.5% of GNI over time, but “cannot commit to a date, given the current state of the federal budget.”

The Coalition would set new priorities in allocating foreign aid towards non-government organisations and away from multi-lateral organisations.

Other Coalition savings include a change to the Murray Darling Water Buyback Scheme ($650m) to spread four years’ worth of spending over six years instead, and a further 0.25% efficiency dividend on the public service ($428m) through limitations on advertising, consultancies and travel.

The savings include $1 billion from stopping the boats, though this was not costed by the Parliamentary Budget Office.

The Coalition says it will increase spending on hospitals, schools, defence and medical research.

It also says the Parliamentary Budget Office had advised that the budget would improve by a further $1.1 billion as a result of abolishing the carbon tax and the associated surge in economic growth, based on treasury modelling of the macroeconomic impact of the carbon tax.

Kevin Rudd in his Press Club address said that Tony Abbott had been guilty of a “pattern of evasion” over his costings.

He had promised no cuts to health, education or pension. But, Rudd said when Abbott had been asked today about what areas would be quarantined from his proposed commission of audit he had said “I am very happy to have a commission of audit go through the whole of the administration”.

“So one day education and health is supposed to be quarantined; the next day they are not,” Rudd said, “If you are in doubt after all this evasion on how Mr Abbott’s massive cuts would hurt your jobs, schools, hospitals and the economy in these fragile times, don’t vote for him.”