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Coalition's economic and tax package: a statement addressed to the family rather than to the economic problems facing the country

RICHARD PALFREYMAN: The Opposition's much vaunted tax policy seems to have passed its first test with colours still flying. The political consensus is that Andrew Peacock's hit the right hip-pocket nerve, but it is a statement addressed to the Australian family, not to the fundamental economic problems now facing the country. That's the harsh, economic criticism of the Opposition's tax policy and, in a moment, we'll be joined by a former Deputy Secretary of the Commonwealth Treasury, who will explain where he thinks it falls short. After that, a former Secretary of the Treasury, the Shadow Finance Minister, Senator John Stone. First, this assessment from our economics correspondent, Peter Martin.

PETER MARTIN: It is a statement as good as certain to give us continuing high interest rates, and it marks a major change of direction in stated Opposition policy. In the past, we were told that the Opposition would ease pressure on interest rates by putting pressure instead on government spending - a perfectly legitimate alternative - and one that had had the Government worried.

Finance Minister, Senator Peter Walsh, prepared detailed numbers purporting to show the effect of a cut in net government spending of, say, one or two billion dollars. He needn't have bothered. The net effect of $2.7 billion worth of spending cuts, with $2.5 billion worth of extra spending in the form of new tax concessions - well, it is pretty close to very little. The Opposition counters that by saying it's privatising to the tune of $3.4 billion. But whatever the other arguments in favour of privatising Qantas and Medibank, they are still going to be flying planes and they are still going to be paying doctors, easing the pressure on interest rates by pretty close to very little.

Australian families will get a better deal; Australian home buyers trying to borrow, won't. It's an admission that the Opposition has no more courage than the Government when it comes to finding alternatives to high interest rates. Tweedle-dee will give us high interest rates with spending on Aboriginal Affairs and overseas aid. Tweedle-dum will give us high interest rates with spending on families with children.

It is not known how the ex-Treasury economists who advised Andrew Peacock feel about what's happened to their advice, although Mr Peacock, himself, is quite pleased to use their authority when answering questions like this one this morning from radio's John Laws.

EXTRACT:

JOHN LAWS: There is no chance that the numbers won't add up, like they didn't last time?

ANDREW PEACOCK: Oh, no. Not only were there in office checking, the consultants that we used on this to assist us in the calculations were former first assistant secretaries - that's senior officials in the Treasury who are very skilled at modelling matters of public administration such as this. Now, I mean, if the Treasurer does different assumptions here and there, he might get a different conclusion, but he'll have to tell you what the assumptions are. If he uses the assumptions we've made throughout this document, he's got to come up with the same figures, or else he's misleading people, and we'll be double-checking his figures, I tell you.

RICHARD PALFREYMAN: Andrew Peacock on Sydney radio station 2UE this morning.