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Election '96: validity of costings by the Government and the Coalition assessed

TONY EASTLEY: The Federal Government has labelled John Howard's costings of his election promises as shonky. But the Coalition says there's now a cloud over the Government's plans for the Budget.

John Howard's figures, released yesterday, would give a $6 billion boost to the Budget over three years. That would come largely from spending cuts to the public sector and welfare benefits. Some of those measures, including the plan to ban migrants from receiving benefits for two years, have attracted community criticism. But there's also fresh doubts about Paul Keating's promise to raise $800 million from rich tax avoiders.

Chief political correspondent, Fran Kelly, reports from Canberra on the economic claims of both parties and what the voters can make of them.

FRAN KELLY: In the interests of fiscal honesty, both sides have now released figures showing how they'll pay for their election promises. Both sides have also managed the incredible feat of allegedly improving the Budget surplus over the course of this election campaign. The Government will add $3.5 billion over four years to the Budget bottom line, and the Coalition will do that and much, much more. Their economic plan improving the Budget by $6 billion over three years.

But in reality, honesty is not featuring here. If it was both sides would admit that on the reckonings of nearly all major independent economic analysts, the Budget is now heading for a big deficit next year, not the $3 billion surplus the Treasury was forecasting last May.

In that case, none of the election promises from either side can be afforded, and responsible economic management would have both parties directing all their newfound spending cuts and revenue raising to repairing the almost certain hole in the Budget.

Given that both sides are refusing to acknowledge that hole, the voters can only look to their costings and how they're funding their election promises to decide who they want to install as economic managers for the next three years, and what they see is two very different styles of managing the economy.

The Government will fund their promises and fix the Budget in a large part by hitting the horrible 100 - the rich tax avoiders currently hiding their money in trusts and blithely collecting welfare support at the same time. That will reap, according to an incredibly optimistic government, $800 million a year.

The Coalition on the other hand will hit dole bludgers, migrants and a bloated public service - those three targets offering $3 billion over three years.

But on A.M. this morning, Finance Minister, Kim Beazley, said the Opposition's costings are not only unjust, but also shonky.

KIM BEAZLEY: Six months, say, is about $30 million. That is the six month inability to make a claim that we have in place at the moment. John Howard claims that two years produce $250 million. Now, set aside the fact that a substantial number of people do, of course, find work after six months, but all the estimates that we can come up with as we go through that, is the maximum possible saving would be $90 million by that process.

FRAN KELLY: So you're saying their costings are just wrong.

KIM BEAZLEY: They're just wrong. That's $180 million blown out straightaway. Then we go to the work test. Now what do they say about the work test? And I'm not going to the social justice issues concerned here. They say that there is going to be $118 million per annum from stricter enforcing of the activity test. And if you actually look at what that means, is you have to make an assumption that 26 per cent of unemployed people - 202,000 - are actually acting regularly in breach of the work test. That is an absurd assumption.

FRAN KELLY: But even you said some ethnic groups are already suggesting the Coalition's two-year ban on social security benefits will result in lower immigration numbers, as it discourages new migrants. But John Howard told reporters this morning that his policy is fair and just.

JOHN HOWARD: I don't accept for a moment that this will produce any sour relations. You've got to remember that ethnic communities are part of the entire Australian community. They will benefit. And can I say from future policies, their families will benefit from the attitude and the approaches of the Coalition. And this policy will be seen by the entire community as a very fair policy. It in no affects anybody now in Australia. I want to make that very clear. Not one person in Australia, no matter what that person's origin, if they've only been in Australia for five minutes, they are utterly and completely unaffected by this policy.

FRAN KELLY: The Prime Minister has made a show of his intention to catch rich tax avoiders who are shirking up to $8 million a piece in tax revenue through complex trust arrangements. But the Canberra Times reports today that tax officials say he's blown that chance now by flagging the crackdown. If that's true then there goes the $2.4 billion he was going to add to the Budget bottom line. And John Howard couldn't resist a jibe at the Prime Minister's apparent naivety.

JOHN HOWARD: He's like Elliot Ness warning Al Capone that he's going to raid a speak-easy in two months time, and wondering why he doesn't get any benefit out of the raid. I mean that is exactly what Keating has done. He said to the tax avoiders of Australia: Hey, I'm awake up to you, and what's more I'm so keen to get you, I'm going to give you a couple of months notice that I'm coming after you.

And what he does is to allow them to reorganise their affairs, to find another tax avoidance scheme and surprise, surprise, when you turn up at the warehouse, the stolen goods are gone. I mean, I know from past experience, may I say, that the only way to be effective with tax avoiders is to actually make an announcement that a practice is outlawed from the very minute of that announcement.

The revelation in the Canberra Times this morning has completely detonated any credibility the Prime Minister had on this issue. He looks a fool, he's behaved in a foolish fashion, and it is little wonder that the anger of the taxation investigation officers is literally dripping out of the article on the front page of the Canberra Times.

TONY EASTLEY: John Howard.