Since its election in 2013, the Coalition has given away $46 billion in political decisions, and signed the Commonwealth up to $50-60 billion in long-term spending that will hammer the federal budget for decades to come.
The 2013 Pre-Election Fiscal Outlook, produced independently by Treasury and Finance, forecast a return to surplus this financial year and net debt peaking last year at $219 billion. The Coalition’s first budget forecast a return to surplus in 2018-19 and net debt peaking at $264 billion. In MYEFO at the end of 2016, however, the budget was forecast to be still in $10 billion deficit in 2019-20, when net debt would be $364 billion.
And while much of the dramatic deterioration of the budget under the Coalition is due to constant revenue writedowns (in spite of the government insisting it had “drawn a line in the sand” under any further writedowns), the government has dramatically worsened its own position through a series of political and ideological decisions that give the lie to its claims to be the victim of an irresponsible Senate:
- an $8.8 billion gift to the Reserve Bank to make the 2013-14 budget deficit look worse and earn future dividends for the government
- Repeal of the carbon price cost the Commonwealth around $12.5 billion in lost revenue over forward estimates and at least $1.8 billion per annum beyond that (based on a conservative estimate by the Climate Institute, lower than the government’s own estimate)
- The government’s company tax cuts agreed last week will cost $5.2 billion over forward estimates
- Repeal of the mining tax — despite the government’s claims that it raised no money — cost it $3.5 billion over forward estimates, according to budget papers.
- The reversal of Labor’s changes to Fringe Benefits Tax reporting requirements to end the rorting of novated leases cost, by its own admission, $1.8 billion over forward estimates
- Income tax cuts for middle- and high-income earners cost $3.8 billion
- The ineffective Emissions Reduction Fund, is costing $2.55 billion, although the government has decided no further funding will be wasted on it
- A Northern Australia Infrastructure Fund, established with no effective oversight, assessment or evaluation mechanisms and flagged as a funding source for unviable coal mining projects, will cost $5 billion.
- A National Water Infrastructure Development Fund established as a funding source for Barnaby Joyce’s obsession with building more dams, is costing $0.5 billion.
- A scheme to prop up dairy farmers threatening to desert the National Party, via the discredited means of concessional loans, is costing $0.55 billion.
- Australia’s continuing participation in Middle East military ventures has so far cost $0.72 billion since Tony Abbott sent Australian forces back to Iraq in the name of fighting the “existential threat” of ISIS.
- The government is spending $0.24 billion on a school chaplains program, although further funding has been halted for now.
- Nick Xenophon extracted an additional $0.37 billion worth of conditions as price for his support for company tax cuts last week.
However, there are significant costs beyond forward estimates from a number of other government measures.
- The disastrous F-35 joint strike fighter program will cost taxpayers at least $17 billion over the period to 2023, as new information emerges about problems with the aircraft that are not being addressed or are worsening, and with no guarantees the cost will not escalate further.
- The government’s decision to reverse the Abbott government’s approach and construct the new generation of Royal Australian Navy submarines in Australia is expected to add up to 30% to the $50 billion cost of the program in order to provide less than 3000 jobs in South Australia.
- The company tax cuts agreed last week will cost $25 billion over ten years, although the government remains hopeful it can increase that cost to $50 billion. There remains no evidence from anywhere in the world of any economic benefit from company tax cuts.
- The continuing fiscal impact of some of the above measures beyond forward estimates will cost the budget, on a conservative estimate, $6 billion per annum (unindexed).
Some of the decisions were backed by Labor — the submarines decision, which will cost the taxpayers of the future many billions of dollars, the F-35 purchase, and income tax cuts. But the theme of all of these decisions is that they are in defiance of evidence, represent the triumph of ideology over reason and in many cases were rankly political. Worse, some of them are likely to generate new waves of spending: the removal of an effective, cheap carbon price in 2014 created an energy policy vacuum that led directly to the current energy crisis and proposals from the government to spend billions of dollars re-entering the power generation industry. Our military involvement in the Middle East looks set to increase, not decrease, in coming years. The cost of poor decision-making will be borne by taxpayers for years, even decades, to come.
And don’t forget the closure of the car industry. Joe Hockey wanted to save up to $330 million a year in grants to the car makers and parts makers, forgetting that the 40,000 full-time and 120,000 part time workers who will be out of a job or have less opportunity to work were paying around $1.3 billion in income tax every year. Clearly the work of a great brain.
What I find most galling is how the Newscorp media has been completely silent here. Yes I know they are very partisan and biased, but it still amazing how they hammered Labor for years about their “Budget Emergency” and not raise a single peep when the Liberals do a far worse job.
The Coalition has screwed the NBN which would’ve been a threat to Murdoch’s Foxtel had the speeds been as promised under the Rudd version.
Under the Trumble version the speeds are a joke, Foxtel is safe. Newscorp would not want to rock that boat.
Follow the money. Foxtel definitely benefits from a crap NBN as do the TV outlets. Their day is coming though, for better or worse Youtube is rolling out a complete online subscription service identical to Foxtel cable service and no doubt there will be others. On my reckoning this will save me about $100/month (yes, my wife is a sports tragic) AND piss off Murdoch no end.
No doubt the Coalition has a cogent and convincing response to all of the above: “it’s all Labor’s fault”. And it’s even better than that – every time the Coalition does something that increases the debt even further, it is (in the considered view of apparent experts such as Kenny, Massola et al) actually a genius move that obligates Labor to immediately explain in exhaustive detail how they will remedy the resulting problems.
What’s a “line in the sand” worth when it’s at such a low-water mark?
Ah, the F35 – “The Albatross” …… just one of Howard’s?
All this public money, so that this version of the smoke and mirrors party can say “Look what we did …… Not over there!”?
Not to mention the NBN. A review by Paddy Manning in the Monthly states that the Malcolm Turnbull Mess (MTM) mix of solutions will come in at a higher cost then the original FTTP proposed by Labor, and for an inferior product. Costs in the tens of billions higher and billions in lost productivity and opportunity from an inferior broadband solution.
Go team Australia.
Thank you, Dog’s
The NBN was a major omission. Has the TRUE cost of the Fraudband been calculated compared to the original including all that you point out?
That would be an interesting number.
Very smoke and mirrors, the NBN. I was involved with helping my Mum getting it set up. She previously had Telstra cable. The changeover to NBN involved putting a T piece into the Telstra cable, joining the NBN to it, and being instructed to discard T piece / cable when the ISP modem was connected to it. SMH.
OTOH, where I live, its shown as build in my area, with FTTP. In a multilevel apartment, I think they’re wrong, it’ll be FTTB. Again, the difference between FTTB supplying VDSL2 and this?
The original idea of the NBN was it was built and owned out by the govt (us), paid for by bonds, and paid back over time, just like how large projects were orginally paid for. Who knows what the current mishmash looks like, with parts of it privately rolled out and how much extra it will cost us, not only in the building but ultimately paying the exorbitant usage fees to private corporations. To wit Telstra… One thing is becoming overwhelmingly clear, we’re paying top dollars for a crap system!