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Treasury's public, yet secret, costings

Treasury secretary Martin Parkinson says no.

Treasury secretary Martin Parkinson says no. Photo: Luis Enrique Ascui

Fairfax Media's Peter Martin wrote an important story this week about the federal Treasury's analysis of several Coalition tax policies. However, there's an equally interesting story about how this information came to light, and what parts of the analysis remain secret.

Despite opposition accusations that the Treasury leaked the costings, Treasurer Wayne Swan's office has since confirmed that it - and not the public service - provided Martin with the details.

A similar story unfolded during the 2010 election campaign, when Sydney Morning Herald journalist Lenore Taylor was given access to Treasury costings of Coalition policies. The difference in that case, however, was that the public only found out Swan's office was the "leaker" after the election. Which meant that, for the last two weeks of the campaign, the Coalition had an excuse not to submit its policies to the Treasury under the Charter of Budget Honesty Act (i.e. it could argue it no longer trusted Treasury with confidential information).

But back to Martin's story. The Treasury's rather ridiculous response to it has been that, even though the findings of its costings are now in the public domain (via the media), it still refuses to release the relevant documents.

I asked the Treasury this week for its full report on the costings. My request was declined, so I followed it up:

This week, Finance Minister Penny Wong said there was a public interest in having policies "costed and transparent to the Australian people". Prime Minister Julia Gillard also said she believed "in an informed public debate" and that "Australians are entitled to know what a policy will cost our nation".

There is little room to misinterpret those comments: the government's explicit view is that policy costings should be made public. In that context, why is the Treasury now suppressing its costings of Greens and Coalition policies?

The Treasury's response?

Thank you for your inquiry. The secretary's letter posted on the Treasury website clearly states the process followed and the reasons for following this process. Treasury has no further comment on this matter.

I'll write more about this in tomorrow's Canberra Times.

In the meantime, all we have is Swan's version of the costings (which I've posted below, unedited, in full). Is it selective? Does it accurately reflect the entirety of Treasury's work on the Coalition's policies? Who knows.

______________________________


The Coalition's business tax agenda will increases taxes on business - both small and large - by over $4.5 billion in its first full year and $17.2 billion over the next four years to '16-17, "Treasury analysis" shows.

...

1. They have committed to taking their PPL company tax hike to a second election.

  • A 1.5 per cent company tax levy, which will raise around $3.2 billion each year from Australia's biggest employers, including Coles and Woollies.
  • In 2010, Hockey said of their PPL policy: "Tony Abbott's plan is a huge windfall for big business" (doorstop, 9 March 2010).

2. They will also be increasing taxes on small business (including sole traders, partnerships, companies and trusts) by scrapping the instant asset write-off and other tax breaks that boost cash flows and cut red tape for small business.

  • This will increase tax on small business by over $1 billion each year.

3. Companies also stand to lose around $300 million a year if the Liberals abolish the loss carry-back initiative.

  • Loss carry-back is another initiative recommended by the Henry Review, and subsequently by the Business Tax Working Group.
  • It will help businesses retool, retrain and restructure to take advantages of new opportunities from the rise of Asia. Under the loss carry-back initiative, companies have more certainty that they'll be able to get value from tax deductions from new expenses.
  • NB - Hockey has made it clear that they won't support anything funded by the MRRT, so it is safe to assume that they won't support the loss carry-back initiative:

"In our case, we've said we cannot support tax cuts funded by the mining tax or payments supported by the mining tax because we do not support the mining tax." (Hockey, Insiders, 28 October 2012)

Remember also: the Coalition opposed the company tax cut that the Government sought to legislate.

  • Draft legislation was released in March 2012 (see press release), but the Hockey made it "emphatically" clear that they wouldn't support it (doorstop, 13 March 2012).

JOURNALIST: The mining tax has already gone through the House. So that has to mean that the legislation for a company tax cut or the $5,000 instant right off has to be separate. Are you signalling that when now this comes to the House that you would support a cut in company tax?

HOCKEY: No, no, no, no, no - we have said no. I just said it. I said it emphatically.

SECTOR BY SECTOR - EXAMPLES

Over the four years to '16-17:

  • The manufacturing sector will pay an extra $1.34 billion tax.
  • The retail sector will pay an extra $930 million tax; and
  • The construction sector will pay an extra $860 million tax.

BREAKDOWNS OF THREE POLICIES

  • PPL - $3.2 billion first full year impact, $12.65 billion over four years to 2016-17.
  • Instant asset write off and other small business tax breaks - $1.07 billion first full year impact, $3.7 billion over four years to 2016-17.
  • Loss carry-back - $300 million first full year impact, $850 million over four years to 2016-17.

2 comments so far

  • The answer is simple. You don't rat on your partner while your still in bed with them but rat on others so your partner doesn't leave you.

    Commenter
    Tony of Brisbane
    Date and time
    November 09, 2012, 1:10PM
    • I always thought that the Public Service was meant to be impartial, Clearly not, One has to ask,do we need Treasury as it stands, or should we just out source. I see no transparency from this Department.

      Commenter
      Grand Poobah
      Location
      Just down the road from you
      Date and time
      November 09, 2012, 3:25PM

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