If you listen to the ABC, Treasury is meant to of uncovered a $7 billion + ‘black hole’ in Coalition costings yesterday. Tony Windsor in breaking the care taker convention by releasing the ‘black hole’ claim, says he is now suspicious of the Coalition because of the issue. Let’s get the technical stuff out of the way first. This is a phantom black hole, manufactured by a Treasury department completely compromised by their political leanings towards the ALP.
Firstly, there is capital fund upon which budget projections are partly based. Treasury had refused to give a true answer as to how much money was actually in the fund until yesterday, and hey presto it contradicts what the Coalition was previously told by Treasury under the Charter of Budget Honesty at the beginning of the election – meaning less savings. In other words, Treasury have set the Coalition up – a guerrilla ambush take down to help get the ALP across the line.
Secondly, Treasury have only now just – reluctantly – released what interest rate it is using to calculate the cost of borrowing on the NBN. It bears no relation to the real world at only 4.9 per cent and Treasury have been unable to explain how they came up with the figure. The Coalition used 5.5 per cent, the average of long-term bond yields over the last 6 months. That 0.6 per cent difference means Treasury can claim that the Coalition will save less money than they hope to, $1.5 bn instead of $2.4 bn. Given that the Coalition is doing away with the NBN, it is another after the fact hey presto magic trick from Treasury to get the ALP across the line.
Consider the following:
1. Even if one accepts the Treasury estimates, the Coalition budget surplus will still be at a minimum eight times larger than what the ALP is able to achieve,
2. Treasury under Ken Henry have given up being apolitical advisers to the government – as evidenced by Henry’s starring role in pushing Rudd’s stimulus plan, Henry’s environmental activism, Treasury’s ‘super’ profit mining tax and their role in pushing carbon taxation,
3. Treasury are notorious for getting budget figures wrong, aka their forecast error on the ‘super’ profit tax,
4. The AFP are still investigating a criminal offense in which Treasury leaked policy advice during the election claiming (falsely) that one of the Coalition’s policies had a cost blow-out, and
5. Now that the ALP and the Greens are in alliance together, Treasury aren’t exactly rushing out to cost the budgetary implications of the deal.
Treasury are no longer a credible source of fiscal information. They make up the numbers to suit the ALP and the Greens and embarrass the Coalition.