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Labor's rubbery savings plan riddled with errors.

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Senator the Hon Nick Minchin

Minister for Finance and Administration Leader of the Government in the Senate

Media Release

15/2007 2 March 2007

Labor’s rubbery savings plan riddled with errors

Labor’s alleged list of savings released this morning is riddled with holes and goes nowhere near funding the lavish list of promises already outlined by Labor, the Minister for Finance and Administration, Senator Nick Minchin, said today.

“Even the most cursory examination of Labor’s grandly-titled “Savings Plan,” released by their Finance spokesman Lindsay Tanner this morning, reveals a raft of basic mistakes which further undermine Labor’s already shaky claim to be responsible economic managers,” Senator Minchin said.

Labor’s list contains some glaring errors, including:

z The promise to save money from the sale of Medibank Private: Labor claims a one-off

saving of $12 million by not proceeding with the sale. Medibank Private does not currently pay dividends, whereas if Medibank Private was sold, the proceeds can be reinvested to earn over $100 million per annum. Labor’s policy to stop the sale of Medibank Private would therefore cost taxpayers over $100 million a year;

z The promise to save money by maintaining the Keeping the System Fair initiative: in

fact, the ongoing savings from this program are already included in the forward estimates, meaning there is no net saving available to Labor;

z The alleged saving from withdrawal from the European Bank of Reconstruction and

Development: the Government’s contribution to the Bank is not a cash payment, but a financing transaction, and there is therefore no saving to the cash balance by withdrawing from bank membership;

z A claimed $400 million saving from the abolition of Workchoices: Labor proposes a

massive re-regulation of the labour market, including increasing the role of industrial tribunals. Labor’s regressive IR laws, which are still clouded in mystery because of their refusal to release details, would cost taxpayers substantial amounts in increased bureaucracy,

enforcement and red tape.

“Even the pledges by Labor to axe spending on consultancies, advertising, market research, air travel, Government advertising campaigns and the delay of the Access Card are arbitrary and appear to have been plucked out of thin air,” he said.

“Labor’s “Savings Plan” also provides more proof that they are walking on both sides of the street,” Senator Minchin said.

“Labor constantly accuses the Government of not spending enough money and then claims savings in the very same areas. Kevin Rudd traverses the country on his Magic Pudding tour making expensive promises, and now Lindsay Tanner claims the Government is spending too much.”

Labor’s hypocrisy is starkly illustrated by several examples:

z On 9th May last year, Labor frontbencher Penny Wong described ASIC’s funding increases as

“long overdue” and talked about “how badly it was needed” (see attached media release). Senator Wong even queried whether “the funding increase would allow ASIC to keep up with more innovative white-collar criminals.” Yet today, Lindsay Tanner has announced a massive 12% cut to the ASIC budget;

z On 14th May 2005, Kevin Rudd told the Australian (“Shrinking diplomacy,” Greg Sheridan,

p22) that “Mr Downer has been appalling in not securing resources for his own Department… there are gaps in both the policy analysis front and in the diplomatic representation front through the sheer absence of numbers in vital regions.” Yet today, Lindsay Tanner has announced that Labor would cut $31.3 million from DFAT’s budget;

z Labor has stridently campaigned against the Government’s welfare reforms, but today claims

(erroneously) that they can make further savings from the continuation of the “Keeping the System Fair” campaign;

z Labor has also campaigned against HECS fees and their impact on student indebtedness

(despite introducing HECS in the 1980s). Yet today they have announced the reintroduction of a failed student loan scheme in an attempt to make short term savings - a scheme which was notorious for bad debts and high default rates.

“Labor’s “Savings Plan” folds like a house of cards after even the most basic audit of is errors and unrealistic savings, leaving Labor with miniscule annual savings to fund a long list of spending promises.

“Based on Labor’s record in Government and the appalling financial position of the Labor States, Australians should have no confidence that Labor can manage the Australian Government’s $220 billion Budget with any degree of competence,” Senator Minchin said.

Link to 9th May 2006 media release

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This page was last updated 2 March, 2007

Media Contact: Senator Minchin's Office - Simon Troeth (02) 6277 7400/ (0439) 300 335