View from The Hill

View from The Hill

Day 32: Rudd finds himself outfoxed again on Abbott’s costings

Tony Abbott has been able to get away with releasing his costings late in the campaign. AAP/Alan Porritt

Kevin Rudd has put the spectre of an Abbott government’s swingeing cuts at the centre of his campaign. But at every turn, he has found himself tactically out manoeuvred by the Coalition.

Despite intense pressure on him to release his costings earlier, Tony Abbott held them back to today.

This put them at the very end of the campaign, so there is minimum time for scrutiny and argument, and conveniently after the TV advertising black out. But the opposition was not satisfied with that. Its final taunt at Rudd was to schedule its news conference for 2:30pm - exactly an hour after Rudd finished his appearance at the National Press Club.

That meant the PM could only attack the costings in general terms. Anything too specific risked getting the wrong grab onto the TV nightly news bulletins. Notably, for once he did not repeat his claim about Abbott having a $70 billion funding hole.

The opposition has been canny in its savings targets. It proposes to take $4.5 billion out of the foreign aid budget over four years, which offsets its nearly $5 billion infrastructure program. Abbott wants to be the “infrastructure prime minister”, not the leader with an international heart.

On moral grounds, this cut is reprehensible. As Tim Costello points out, Australia is one of the few countries with a growing economy. We should be able to afford a greater level of foreign aid, and we were already committed to it. When their backs are up against the fiscal wall, neither side has any compunction with hoeing into this area. The government has previously done so.

But politically it is a soft target - which is no doubt one reason why it is a target. There is a vocal constituency committed to foreign aid, but it is small. The issue is not a mass vote changer. Most people just don’t care enough. The Opposition is running the line to voters that we can’t afford to send so much aid overseas aid when we have economic challenges at home. Most voters won’t be too fussed by international need.

We should’ve seen this coming. In 2011 there was a stoush in the Coalition over foreign aid. Abbott wanted to cut assistance to Africa; the plan was resisted by foreign affairs spokeswoman Julie Bishop. She had a victory in the compromise that was worked out. This time Bishop is just sucking it up.

Raiding foreign aid has made it easier to avoid cuts in areas such as health and education, which can be vote changers.

The opposition appears to have taken maximum care in the preparation of its costings. It knew it could not afford a repeat of its 2010 experience, for which it paid a political price. For that election it used private accountants, who were later found to have acted unprofessionally; after the election, when Treasury costed the opposition policies during Abbott’s negotiations with crossbenchers, a large hole emerged.

This time, the Coalition has been able, and chosen, to use the new Parliamentary Budget Office. (Pity the poor officials in that office in the run up to the election - there must be grease spots by now after the amount of work they’ve had to do). The PBO is both qualified and credible and part of the Charter of Budget Honesty process. Under the charter, the opposition has the choice of going to the Treasury or the PBO, and chose the latter, which is at more of an arms length away from the government.

Just to put an extra layer of credibility onto the numbers the opposition appointed an eminent person’s group to sign off on them, comprising Peter Shergold, a former head of the Prime Minister’s department, Len Scanlan, former Queensland auditor general and Geoff Carmody, a respected private sector economic consultant.

The numbers have the budget bottom line more than $6 billion better off than under the government over the forward estimates. This small amount means that the overall fiscal picture is little different from Labor’s. The opposition is not going for an austerity policy, as the government claims.

Despite having its numbers out, the opposition is not willing to pledge to a timetable for return to surplus. Having seen the traumas of the Gillard government, which had to jettison what had been a firm promise, the Coalition has no intention of making such a rod for itself.

For all the reassurance from the Coalition, there remains an air of unreality about these numbers, or any other numbers that could be produced.

Given how the budget has deteriorated dramatically over recent years, no one can be sure of what lies ahead on the revenue front. The economic outlook is uncertain. The numbers for later years in the forward estimates could be changed dramatically by events beyond the policy makers’ control.

Within a Coalition government’s control would be its proposed commission of audit, charged with combing through government programs.

Inevitably this would produce many proposals for savings in programs and even for scrapping some.

Abbott was asked today whether some areas would be quarantined from the audit’s examination.

“I’m very happy to have the commission of audit go through the whole of the administration, to tell us whether, in their opinion, they think things can be done better, and where things can be done better, more frugally, more prudently, with more benefit for taxpayers. Surely it would be a foolish government that would ignore that,” Abbott said.

Rudd, correctly, jumped on this statement. The Coalition has a get-out-of-jail card. It could of course reject some recommendations from the commission. Equally, it could decide that the commission had made an overwhelming case on many fronts.

The commission of audit is a sensible idea. Programs should be reviewed periodically. But let’s be clear. It would be an agent of change.