The election has now descended fully into a fiscal fog. There is no way to gauge whether Coalition costings represent an increase or decrease in fiscal drag given their accrual basis, double-counting and refusal to just give us plain and simple cash numbers from a publicly recognised source. And this morning Labor’s attempt to punch a hole in the fog is itself exposed as fraudulent. From the AFR:
Treasury, the Finance Department and the Parliamentary Budget Office have rejected figures cited by Labor to accuse the Coalition of a “$10 billion fraud” in its claimed budget savings of $31 billion.
In an unprecedented move, and a blow to Labor nine days out from the election, Treasury secretary Martin Parkinson and Finance secretary David Tune released a statement saying it was wrong to use their analysis to discredit the Coalition’s numbers. They said the numbers their departments produced for Labor were based on different assumptions that would “inevitably generate different financial outcomes”.
Phil Bowen, head of the independent PBO, which costed the Coalition’s policies, agreed with Dr Parkinson and Mr Tune. The government tried to discredit the Coalition costings on Thursday by producing costings done by Treasury and Finance on behalf of the government.
“At no stage prior to the [election] caretaker period has either department costed opposition policies,” Dr Parkinson and Mr Tune said.
They went on to say that:
”Different costing assumptions, such as the start date of a policy, take up assumptions, indexation and the coverage that applies, will inevitably generate different financial outcomes.’
That is, in fact, the problem with measuring the Coalition costings. Accrual accounting does not give us a bottom line but Labor has clearly failed to explain that in claiming yesterday:
”Treasury, Department of Finance and Deregulation and Parliamentary Budget Office figures released this morning have exposed a $10 billion hole in the savings claimed by the Coalition yesterday,”
I’m out of indignation. The truth at this point is that I can’t help you understand if the Coalition is offering a stimulus or austerity platform and can’t see what Labor stands for at all.
What I can say is that yesterday’s ABS capex report made it abundantly clear that whoever is in power had better be preparing to run big deficits.
Finally, there doesn’t seem much point labouring the point (pardon the pun) but I’ll just note in passing that the bidding war between Abbott and Rudd over who can close our borders to foreign investment the quickest is as economically self-defeating as anything else in this failed election.
