Andrew Leigh

I spoke in parliament today about good economic management and the importance of Oppositions - ACT and Federal - producing properly costed policies.

Matter of Public Importance, 10 October 2012

It is a pleasure to rise to speak in a debate on the strength of the Australian economy and the right policy settings. Any discussion about where the Australian economy is headed needs to recognise that we are in the midst of one of the biggest terms of trade shocks in Australia's history. In the history of the Australian economy, when a terms of trade shock has come along—whether it was in the 1930s, 1950s or the 1970s—it has blown the place up. Yet, despite a massive increase in the terms of trade—a massive increase in the ratio of export prices to import prices—the Australian economy, this time, has remained strong. Unemployment has stayed at 5-point-something and inflation has stayed low.

Importantly, while the Australian economy is undergoing significant structural adjustment unemployment has not only stayed low, the dispersion of unemployment has also stayed low. But it is still correct that the world is a dangerous place for anyone trying to run an economy well. The IMF yesterday cut its forecast for world output this year to 3.3 per cent, down from the 3. 5 per cent announced in July.

All of us can name important risks, whether it is the Chinese housing market or the need for the Eurozone countries to better manage their fiscal burden. In this environment the Australian government continues to properly cost our policies through the usual budget processes and the mid-year updates. At the last election our policy costings were found to be spot on—no surprise, given that they were prepared by Treasury. Of course, that is more than can be said for the coalition's costings, which were done by a private accounting firm and were out by a cool $11 billion.

The problem with the coalition's costings now is that, while they have said yes to every special interest, they have said no to every tough decision. They said no to the mining tax but yes to the superannuation increase that is funded by it. They said no to the carbon price but yes to the tax cuts and the benefit increases funded by it. When we make hard decisions to means test policies like family tax benefit part B, the baby bonus and the 30 per cent private health insurance rebate, they cry foul about class envy. But it is through tough decisions like this that we made $100 billion in savings over recent budgets.

Bernard Keane went back to look at the veracity of some of the economic predictions made by those opposite. He noted that when the condensate excise exemption was removed in 2008, Senator Johnston called it 'one of the greatest assaults on the living standards of Western Australians I have ever seen in the history of Federation'. Shortly afterwards Woodside unveiled a record profit, up 70 per cent on the previous year. When in 2008 our government lifted the luxury car tax, Senator Fifield called it 'the politics of envy and class warfare'. Bernard Keane pointed out that SUV sales have risen 40 per cent over the past four years. And you will hear those opposite rail against Australia's debt levels—a modest 10 per cent and falling—but you will never hear them admit that taking on that debt saved 200,000 jobs in the global financial crisis.

Here in the ACT it looks as though the local Liberal Party are a carbon copy of their federal colleagues. On 20 October Canberra voters will go to the polls to choose a new government. With newly elected Liberal governments around the country having run, and won, on negative anti-Labor messaging—like the Federal opposition is attempting to do—it is no surprise that the Canberra Liberals are being negative to the last. They are leaving all Canberrans asking what policies they have come up with in the last four years—and the answer seems to be not much. The Canberra Liberals signature policies include promises to reintroduce lightweight plastic bags, despite the fact that they supported a ban on the bags in 2004; to provide a greenwaste bin at no cost, although it has been costed at $19 million a year; and to scrap the nurse-led walk-in clinic that has provided free healthcare to tens of thousands of Canberrans.

But since this MPI is on costings let us discuss the apparent inability of the Canberra Liberals to provide voters with proper costings for their small set of policies. Let us take health. At first the Liberals health spokesperson said their health plan would cost $6.9 billion over four years. And then on 1 October it became a $6.9 billion plan over five years, when the opposition leader intervened. And in the third version it became $6.2 billion over five years. As the website www.realzed.com points out, at best this indicates a massive $800 million cut to public health services. They have not been able to articulate how much money, nor how it will be spent. They have not even said how many beds they will fund—or defund, as they did when they were last in government.

And then there is education. In their education policy the Canberra Liberals omitted to fund the Canberra Institute of Technology. Confronted by Treasurer Andrew Barr over their plan to rip over $100 million out of the vocational education system, the Liberal Treasury spokesman refused to say why vocational education had been omitted from their policies or how much a Liberal government would give the CIT. As Bill Clinton said recently, it is just math.

What is striking about the Canberra Liberals' refusal to detail policies, and their slipshod costings, is how closely it echoes their federal counterparts. A good opposition do not just say what they stand against, they also say what they stand for. It is not good enough for the Seselja opposition to play fuzzy games over what they would do if elected. ACT voters have a right to make a real choice. Frankly, ACT voters deserve better than the Leader of the Opposition and the member for North Sydney's mini-me's: Zed Seselja and Brendan Smyth.

In other states we have seen Liberal Premiers promising no change before election day and then delivering radical cuts afterwards. In New South Wales Barry O'Farrell slashed 800 TAFE jobs and cut 15,000 public servants over two budgets. In Victoria Ted Baillieu has cut firefighting services and some 5,500 public servants are facing job losses. In Queensland Campbell Newman has cut 14,000 public sector workers after telling them before the election that they had nothing to fear from him. Premier Newman has also cut Breastscreen Queensland and the Premier's Literary Awards.

If the Canberra Liberals will not tell us some policies, and cannot cost others, the only thing Canberra voters can judge them by is what their colleagues are doing in other states—and it is not pretty. Federally the opposition leader's plans to cut 20,000 Canberra public servants are met with a deafening silence from the ACT Liberals. When the member for Canning said in this place in one of these debates that public servants 'feed on others' there was not a murmur of criticism from Senator Humphries and the ACT Liberals.

It is very clear that the federal coalition cannot meet their $70 billion costings gap without some radical cuts. Seventy billion dollars is equivalent to stopping Medicare payments for two years or stopping the pension for four years. The coalition say that their policies are ready to go. In fact, in one interview the member for Goldstein said he had already designed the covers. He had the covers done but he will not release the policies. Australians are entitled to ask: if the coalition's policies are so good, why don't they release them?

I think history might provide some of the answers. I have before me the ‘Liberal and National Parties' Public Administration Policy’ for 1996. It says: 'Our plans to reduce departmental running costs by two per cent will involve not replacing a proportion of those who leave—up to 2,500 positions over the first term of a coalition government, a process of natural attrition with no forced redundancies.' But of course what happened was far from that. There were 30,000 public servants who got the sack after the election of the Howard government. What is particularly telling about this document is that it says on the back that it was printed and authorised by A. Robb. That is right, the member for Goldstein was behind a document that said the Howard government would axe 2,500 public servants when it went on to axe 30,000. If they say they are getting rid of 20,000 public servants now, imagine what they will really do.

The Australian economy is the 12th largest economy in the world; we have just risen three places. Our Treasurer has been awarded the Euromoney Finance Minister of the Year award—an award those opposite would be praising if Peter Costello had won it; but because Keating and Swan won it, they trash it.

We put a price on carbon pollution. We are linking our scheme with existing schemes in Europe and elsewhere. We have a AAA credit rating from all three major credit agencies—the first time that has ever happened. Yes, we have challenges but it is all the more reason for Liberals - ACT and federal - to put properly costed policies on the table.