In a ringing endorsement of my own calculations, Saul Eslake has released his Coalition election costings and finds a similar sized black hole in Tony Abbott’s plans to my own $35 billion:
“By our reckoning, over the remainder of the election campaign, the Coalition needs to announce additional savings measures totally in the vicinity of $30 billion over the four years to 2016-17 in order to be able credibly to claim that it would produce better bottom line outcomes than those projected (by Treasury and the Department of Finance)…That is a substantial sum, although it is considerably less than the $70 billion ‘black hole’ suggested by the government.”
Mr Abbott has committed to a better bottom line than Labor. That means we’ll need to see $30-35 billion in cuts (or shifts of spending off balance sheet) in the final week of the election. Perhaps they’ll shoot for higher growth on their tax cuts. For perspective, it’s roughly 2% of GDP or the same amount the Government recently cut in its Economic Update.
Rather than see this as an imminent challenge, Eslake also agrees with MB that this will more likely mean that the Coalition will ride the deficit:
“Given its persistent opposition to attempts to restrain growth in entitlement programs, its commitment to introducing its own big new entitlement program (paid parental leave), its equivocation about the GST, and its general commitment to cutting taxes, it’s unclear whether and how a Coalition government would deal with the longer-term challenges confronting Australia’s public finances”.
The promise has been made, however, so there will still need to be some kind of fiddle to get it through the election.
Eslake goes on to argue that Joe Hockey and Andrew Robb are genuine economic liberals. Hockey has made plenty of the right noises in that regard. Robb, on the other hand, recently endorsed the oligopolies of our economy, which aligns him more with the contemporary loon pond belief in unrestrained private sector activity, whatever the structure. It is hardly a belief in markets. A better label for both might simply be fiscal conservatives, Robb more than Hockey. Eslake sees Tony Abbott and the Nationals as much more entitlement oriented.
He also questions the durability of any post election confidence bounce, especially on the continuation of poor policy.
