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The Costings Fetish and What it May Mean

Australian politics is undoubtedly at a strange place. Since the 2010 election when Prime Minister Julia Gillard and her Labor Government scraped into the power with the support of the Greens and three Independent MP’s, all the usual hostilities have ramped up. Some new battles have even been established too. Much of this can be put down to one simple factor and that is the vicinity of power to the two political leaders. The Labor Party are just holding onto power, only just and the Liberal and National Party coalition still look very close to taking power at the 2013 election despite narrowing poll margins.

Of all the interesting and at times absurd events fomented by the fragile state of play, one of the most interesting has been the growing desire and outward protestations from the ALP , particularly over recent weeks and months, for the Coalition to cost their policies and do so now.

There are always calls from incumbent governments, it is true, for opposition parties to release and cost their policies as early as possible. Why would governments not want to do that? Were that to occur, to be common practice, it would certainly help the reigning political party or coalition to construct a strategy to rip apart the figures.

It has come to light this week that a relatively unusual event has occurred in Australian politics. The Gillard Government, it was revealed, asked Treasury to cost three existing Coalition policies. That analysis found that those three policies would come at a cost of $4.57 billion to businesses in the first year of a Coalition Government from 2013.

As was mentioned before, governments seeking costings in a rather energetic way has always been a bit of a thing. But now it appears to have developed into a fetish. Rarely before have the calls been so relentless and so vocal. Again, that mostly goes down to the thirst for either maintaining or gaining power, a hunger that both sides of politics have at the present time.

Really though, it is completely stupid to be asking, to be demanding that opposition parties release their policies so far out from the election. If the budget state is uncertain and your party have announced, or have a well-entrenched focus on achieving a particular budget outcome, then it would be folly to release your costed policies so far out from the election.

It is almost without doubt that the Coalition will either drop outright or alter, either in part or dramatically, their existing policies. You could almost be sure that the paid parental leave scheme will be different to the existing policy. The rhetoric around that policy has shifted and talk about it from the Coalition is no longer a priority, almost to the point of no words being uttered willingly about the proposed scheme.

Not only that, but the Opposition would surely be considering a number of cuts to existing government programs. That’s a hallmark of Liberal administrations.

An interesting thought does come to mind when thinking about the reasons for the Gillard Government seeking and then leaking costings of Liberal Party policies.

The possibility of a March election has been raised in the last week or so in response to a rush on the part of the Labor Party to get legislation through the parliament before it rises for the Christmas break.

Of course, running up to an election, as a government, you might want to look like you are getting things done, even though to some, too much government is a very bad thing. Australians though, on the whole, while they hate their government, whatever the political complexion, they tend to want, or rely on its intervention.

And so the recent suggestion of the Coalition has some weight. An early poll probably will not eventuate, but the thought must not be discounted.

Really, the most likely reason for the politicisation of Treasury is the thirst for more political blood. Surely the Gillard Government is itching for more momentum, to capitalise on recent movements.

It is the job of the Coalition to release their final suite of policies close enough to the election to put them in the context of the fiscal position but far enough out from the polls so that the public get a good look.

Now is too far out, despite what the Labor Party and sections of the media will have you believe.

Not So Taxing Times

The Minerals Resource Rent Tax has commenced and it’s causing problems for the Gillard Government, including in particular, the Treasurer. What most people would not have expected is the way in which it is causing trouble for Wayne Swan. Instead of having to defend a huge tax grab, the Treasurer today was forced to respond to reports in newspaper The Australian that the MRRT failed to raise any revenue in it’s first quarter of operation. This is a circumstance few would have seen coming, though tumbling commodity prices should have provided somewhat of a warning to the pundits.

You see, the Minerals Resource Rent Tax, the renegotiated version of Kevin Rudd’s Resource Super Profits Tax was designed in an interesting way. Even though the name was changed, the new iteration was still a tax on profits. Therefore, when profits were high, the tax would be paid and when they were low, it would not.

Budget papers, released earlier this week in the Mid-Year Economic and Fiscal Outlook showed that the government believed the tax would still raise $2 billion this financial year.

A failure to clearly sell the way the tax works is the main reason that the response today was as it was. Too little time was spent saying that the tax would not raise revenue in bad times, but would in good times.

It is also a failure of design. If the ALP wanted to be sure of revenue then pegging the new tax to profits as they did was not the way to achieve a certain stream of revenue, especially one so easily impacted by poor commodity prices. To make matters worse, the new mining tax is not to prop up revenues with proceeds put away for future benefits. No, the tax revenue raised was to pay for promises made by Labor.

Clearly the turn of events this week, including the broader revenue shortfalls announced as part of MYEFO, make the prospects of returning to surplus extremely unlikely. Commodity prices for one would have to not just get back to where they were, but likely higher to make up for the time when the price was below expectations. Those prices could yet stay low for some time.

But the tough week, more accurately the tough day today did not end there for Mr Swan.

Speaking to reporters in Brisbane today, Treasurer Wayne Swan twice made a mistake when saying how much revenue the Minerals Resource Rent Tax would provide to the budget bottom line. Twice the Treasurer said that the tax would make $9 billion this financial year.

Actually, the resource rent tax is set to make $9 billion, not over the first year, but over the forward estimates, the next four financial years. It was a case of third time lucky for Mr Swan.

Ordinarily a simple gaffe like that does not mean much. It happens to politicians from time to time. However,for a Treasurer battling for a surplus and not having the numbers add up, it adds to a perception of confusion and uncertainty on the part of Wayne Swan and the Gillard Government.

The Opposition of course were crowing, enjoying a day where again, the Treasurer has been squirming over economic issues. But the celebration should also have been a tad on the difficult side for them too. The tax raised no revenue, so it was not doing the damage to the economy and businesses that the Coalition had warned about.

Federal Labor are seeing any remaining hope they had of returning the budget to surplus, which was delusional in the first place, evaporating before their very eyes.

But it is not the surplus the ALP should be most worried about the most. It is a worry, but the least of them. What they should be worried about the most is how much they might have to borrow to pay for the spending promises associated with this new tax of theirs.

Question Time Ahead of Time

Congratulations Australia, we’ve almost made it through another week of parliament, and more importantly, Question Time. It’s not been the most rancorous, loud or boisterous of weeks, but nonetheless, it hasn’t exactly been subdued. We could hope that this is down to the words of caution from Malcolm Turnbull about how poor the parliamentary and broader political debate has been, but it’s more than likely that it’s just been a slightly nicer week of behaviour from our federal parliamentarians.

It’s also been a bit of a strange week in the way of the questions asked by the Opposition. For the most part, the Coalition, led by Tony Abbott has not prosecuted the case against the carbon tax. Most of the focus this week from the Liberal and National Party Coalition has been on the state of the budget. They’ve asked how, with lower government revenues and more high cost promises in recent weeks in particular, that it will be possible for the government to return to surplus in time.

The price on carbon though has repeatedly made appearances throughout the week so far. But the comparative absence of questions on the matter from the Coalition is very surprising, given that it’s been the central plank of Opposition attacks since the government got back in power under minority government.

There has also been a question or two from the Opposition over the week about asylum seekers. This has been in relation to the re-opening of the Nauru and Manus Island immigration facilities recommended by the Houston panel just a matter of weeks ago. They’ve also been centred around pushing the government to adopt other elements of the Howard-era ‘Pacific Solution’ which included Temporary Protection Visas, colloquially known as TPV’s and turning back the asylum seeker vessels when safe to do so.

The government again this week has been all about a broader explanation of government policies and promises. They’ve spent this week talking about education, health, infrastructure, jobs, skills, wages and vulnerable groups of people in the community.

It’s more than likely that the Opposition will continue to pursue the government over the budget and their spending priorities and whether or not new or increased taxes will be instituted to pay for the shortfalls in revenue and existing funds after these promises are funded.

They will likely again have a question or two, perhaps a number of questions, devoted to the carbon tax which no longer has a floor price and now won’t rely on the closure of the five biggest coal-fired power stations in order to reduce emissions.

Just as likely, but perhaps less prominent as has been the case this week, is the possibility of a question or two on asylum seekers and the now almost ready detention centres on Nauru and also the one on Manus Island.

The strategy of the Labor Party, through their use of the Dorothy Dixer has been just as predictable, though the mix of questions slightly uncertain. This however, changed yesterday. With the Queensland budget calling for big staff cuts and NSW also looking to take a slice out of education funding, the government used answers to warn that a Coalition Government at the federal level would do the same. These questions though will likely still cover the areas of education reform, health, infrastructure, communities, families, employment, wages and skills. 

This in some way, shape and form has been the way it has been all week and will likely continue to be until the next big issue comes along to steal some political thunder.

Question Time Ahead of Time

Another day of federal parliament and Question Time has passed us by. Tuesday was a bit of a noisy one, louder than Monday anyway. Tuesday’s session of Questions Without Notice saw the Member for Mayo, Jamie Briggs booted from the lower house under standing order 94a for abusing a point of order he raised in relation to an answer from the Acting Prime Minister, Wayne Swan. Despite that, a wide array of issues were canvassed from across the parliament, though the variety of policy areas was more diverse on the government side through the use of the Dorothy Dixer.

The Opposition spent the bulk of Questi0ns Without Notice pursuing the government over their spending priorities, in particular the so-called “big new spending” announced by the government this financial year. The questions pointed out the spending and revenue problems that the Gillard Government faces as they prepare to, most likely in vain, return to surplus next year. Most of the questions asked whether or not taxes would be raised in order to aid the government in returning to surplus.

Though there were a majority of questions focused on the budget, the price on carbon did make a much larger return to the Question Time arena on Tuesday, with questions about hospitals and the carbon tax and closing coal-fired power stations which will at this stage no longer occur as the government seeks to cut carbon emissions.

Oh, and there was the obligatory asylum seeker question from the Coalition at the start of Question Time.

The government again was much less focused on one or two issues during Question Time and continued using the Dorothy Dixer to ask a number of different questions on different policy areas. There were questions on the economy, supporting those in need, the so-called ‘super trawler’, schools investment, health, jobs, skills, wages and housing.

Because of the predictable nature of this, the 43rd parliament, it is almost certain that the strategy for Questions Without Notice for both sides of the political divide will remain the same, or at least largely identical.

On Wednesday, again the Coalition will most likely focus questions to the government around the budget. They will again ask how the government will return to surplus with new and continued spending commitments and whether or not this will require tax increases or whether or not it just won’t happen.

A second major focus may be the price on carbon again which was the focus of the second part of Question Time on Tuesday afternoon. This will likely focus around coal-fired power and businesses and organisations that are impacted by the carbon price but will not receive compensation from the government.

Of course, it being the Coalition, there is always the distinct possibility that there will be at least a question or two on asylum seekers and refugees as the government prepares to send the first boat arrivals to Nauru.

The ALP for their part will again try to prosecute their case for having acted in a wide selection of policy areas. This will likely include again, the comparative strength of the economy, schools investment, health, vulnerable people, jobs, wages, skills, housing and infrastructure.

The only unknown is how bad the behaviour will be, but we can all live in hope that it might just be a little more constrained and dignified than we have become accustomed to when it comes to politics.

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