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Policy on the run leaves black hole in Labor savings plans.



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MEDIA RELEASE SENATOR THE HON NICK MINCHIN Minister for Finance and Administration Leader of the Government in the Senate Liberal Senator for South Australia

31 October 2007 94/2007

Policy on the run leaves black hole in Labor savings plans

Kevin Rudd’s desperate and hasty abandonment of savings measures has left him with a large fiscal black hole, the Minister for Finance and Administration Senator Nick Minchin said today.

“Today it was reported that Kevin Rudd made a snap decision to abandon some $2 billion of savings measures, creating an overnight black hole in Labor’s costings,” Senator Minchin said.

“Labor frontbenchers had previously claimed they would fund all new spending commitments from savings. But today it was reported that they were caught off guard by Mr Rudd’s policy on the run. Mr Rudd must now come clean as to what further secret savings he has in mind to make up for his panic move yesterday.

“An analysis of Labor’s own costings data (see attached spreadsheet) from policies released since Mr Rudd became Leader, combined with Mr Rudd’s promises in this election campaign, shows that Labor has gross new spending commitments of $8.853 billion over the forward estimates.

“If Labor’s claimed savings of $2.423 billion are subtracted from their commitments, this leaves a $6.4 billion net gap between spending and savings.

“In addition, the gap between spending and savings grows over time, so by 2010-11, Labor’s net new spending commitments amount to nearly $2.3 billion per annum.

“This analysis cannot be dismissed by the Labor Party, because it uses their own leaked data.

“It is also consistent with the Government’s existing tally of Labor spending announcements totalling more than $20 billion, because the latter includes some commitments which come to fruition after the forward estimates period, and also includes Labor’s road and water announcements, both of which are assumed to be funded from within existing programmes.

“The Labor Party is cooking up its economic policy on the run, which is not how true fiscal conservatives behave. This is no way to run a $1 trillion economy,” Senator Minchin said.

CONTACT: Simon Troeth (02) 6277 7400/(0439) 300 335

http://www.financeminister.gov.au/

2007-08 2008-09 2009-10 2010-11 4 year Total $m $m $m $m $m Comment

ALP Claimed Savings Do not call register

5.0 8.0 6.0 6.0 25.0

(Unclear what this saving reflects)

ACMA

3.0 6.0 6.0 6.0 21.0

(Unrealistic, as Labor claims functions will be absorbed by DCITA)

Carrick Institute 5.0 11.0 11.0 11.0 38.0

Workchoices

69.0 142.0 61.0 61.0 333.0

(Unrealistic estimate - Fair Work Australia likely to cost more)

FTB (B) cap 8.0 8.0 8.0 24.0

Student Financial Support Scheme

17.0 31.0 28.0 25.0 101.0

(represents increased student debt)

Advertising 50.0 100.0 100.0 100.0 350.0 (no specific information on

which campaigns will be cut)

Printing allowance 10.0 10.0 10.0 30.0

Future Fund unit 1.0 1.0 1.0 3.0

Recruitment agencies 8.0 16.0 16.0 16.0 56.0 (estimate has no

supporting information)

Consultants Savings achieved through 1.25 per cent efficiency dividend

Polls andmarket research 7.0 15.0 15.0 15.0 52.0 (estimate has no

supporting information)

Commonwealth travel Labor's policy is the same as the Government's

DFAT 4.0 9.0 9.0 9.0 31.0

Access Card 230.0 346.0 8.0 -282.0 302.0 (temporary saving)

Nauru/Manus Island 15.0 30.0 30.0 30.0 105.0

Invest Australia 12.0 23.0 23.0 23.0 81.0

Political donations 9.0 12.0 12.0 33.0

Financial literacy foundation 2.0 5.0 5.0 5.0 17.0

ASIC 18.0 37.0 37.0 37.0 129.0 (represents a 12 per cent

cut in ASIC budget)

Inspector-General of taxation 1.0 2.0 2.0 2.0 7.0

Electronic authentication 6.0 9.0 15.0

NCA 2.0 3.0 3.0 3.0 11.0

Tax compliance Gov't has announced larger tax compliance savings in MYEFO

Schools Green vouchers 50.8 149.0 51.3 34.3 285.4 (used to offset solar

schools policy)

Governments dental program 37.4 94.3 104.5 141.3 377.5 Budget measure

Maximum possible ALP Savings 542.2 1,064.3 546.8 273.6 2,426.9

Net cost of ALP promises 257.9 1,460.2 2,317.1 2,390.8 6,426.0

Savings Junked by Labor 4 year total

Badgery's Creek 750.0

Cigarette Excise 630.0

State Corporations Law payments 719.0

TOTAL 2,099.0

Savings no longer available post-MYEFO

Tax compliance 667.0

Consultants 395.0

Extra efficiency dividend 520.0

Foreign residents' super 2,000.0

Total 3,582.0

2007-08 2008-09 2009-10 2010-11 4 year Total $m $m $m $m $m Comment

ALP Spending Commitments Early childhood (access to early learning) (starts in 2012) Extra uni places for early childhood 14.0 24.0 35.0 43.0 116.0 ALP cost estimate

HECS reduction for early childhood students (combined with the above) No TAFE fees for child care trainees 15.0 15.0 30.0 ALP cost estimate

Gorgon royalties (beyond the forward estimates)

National Curriculum 5.0 5.0 10.0 ALP cost estimate

Trade centres in secondary schools 233.0 243.0 253.0 729.0 ALP cost estimate

School grants - on the job training for years 9-12 28.0 28.0 28.0 84.0 ALP cost estimate

VET Career Education Foundation 2.0 2.0 2.0 6.0 ALP cost estimate

Halving withholding tax on distributions to non-residents 100.0 100.0 100.0 300.0 Cost estimate Fixing pipes in local towns 25.0 50.0 75.0 100.0 250.0 ALP cost estimate

Asian languages strategy 15.0 20.0 30.0 65.0 ALP cost estimate

Indigenous policy 11.0 21.0 28.0 32.0 92.0 ALP cost estimate

Encouraging young Australians to teach maths and science 48.0 145.0 243.0 436.0 ALP cost estimate Early childhood centres 15.0 60.0 75.0 ALP cost estimate

Clean Coal initiative 75.0 75.0 75.0 75.0 300.0 ALP cost estimate

Local Schools working together 30.0 32.0 62.0 ALP cost estimate

Australian Early Development Index 4.0 4.0 4.0 4.0 16.0 ALP cost estimate

Enterprise Connect Innovation Centres 33.0 66.0 66.0 66.0 231.0 ALP cost estimate

Green Car Innovation Fund 100.0 100.0 Cost estimate

Australian Solar Institute 30.0 30.0 20.0 20.0 100.0 ALP cost estimate

Geothermal drilling (combined with the above) ALP cost estimate

500 new AFP officers 10.0 22.0 32.0 52.0 116.0 ALP cost estimate

Rainwater/greywater plan 0.0 38.0 38.0 50.0 126.0 ALP cost estimate

Aged care beds 8.0 26.0 41.0 55.0 130.0 ALP cost estimate

Housing affordability Fund 100.0 100.0 100.0 300.0 ALP cost estimate

English language training for new arrivals 12.0 13.0 14.0 39.0 ALP cost estimate

Rental subsidy scheme 21.0 66.0 150.0 237.0 Cost estimate

Timber skills 6.0 7.0 7.0 20.0 ALP cost estimate

Health and Hospitals package 500.0 500.0 500.0 500.0 2,000.0 Cost estimate

Climate change and primary industries policy 40.0 40.0 50.0 130.0 Cost estimate

300 Indigenous rangers 15.0 20.0 25.0 60.0 Cost estimate

Post natal depression 10.0 15.0 15.0 40.0 Cost estimate

Cancer research 5.0 5.0 5.0 15.0 Cost estimate

Nursing 5.0 15.0 25.0 35.0 80.0 Cost estimate

Childcare Tax Rebate 642.0 408.0 442.0 1,492.0 ALP cost estimate

Home interaction program 6.0 6.0 6.0 6.0 24.0 Cost estimate

Breast cancer (matching the Government) 12.2 16.2 4.1 8.5 41.0 Coaltion election

commitment

Can Teen (matching the Government)

15.0 15.0

Coaltion election commitment

Solar schools 50.8 149.1 63.8 46.8 310.5 ALP cost estimate

Solar cities 1.0 8.0 8.0 8.0 25.0 ALP cost estimate

Green Loans 8.7 30.5 63.1 102.3 ALP cost estimate

Insulation for rental properties 12.5 37.5 50.0 100.0 ALP cost estimate

Indigenous children's health and early development 56.0 56.0 56.0 168.0 Macklin $260m announcement (18/10/07) less $92 million above

Water project tax rebates 100.0 100.0 200.0 Cost estimate

Net impact of tax policy 0.0 0.0 240.0 -450.0 -210.0 ALP cost estimate

Labor's dental policy

90.0 100.0 100.0 290.0

Cost estimate ($290m total)

Total ALP Spending Commitments 800.0 2,524.5 2,863.9 2,664.4 8,852.8

Labor spending and savings

0.0

500.0

1,000.0

1,500.0

2,000.0

2,500.0

3,000.0

3,500.0

2007-08 2008-09 2009-10 2010-11

$ million

ALP spending ALPsavings

Net cost of ALP promises

0.0

500.0

1,000.0

1,500.0

2,000.0

2,500.0

3,000.0

2007-08 2008-09 2009-10 2010-11

$ million

Labor's net spend