Labor's big-ticket promises may leave Coalition in a bind
If Wayne Swan and Joe Hockey sound like they are talking about different budgets when each shouts that the other is digging a "black hole", that's because they (sort of) are.
Labor is focusing on the immediate hard yards, returning the budget to surplus across the four years of forecasts, despite its tax take falling $3.9 billion this year and $11.4 billion over the next four.
The Coalition is mainly focusing on the massive costs of Labor's recent promises that extend far beyond that time frame.
Labor's long-term spending plans could leave Joe Hockey with a headache. Photo: Alex Ellinghausen
Swan has scraped and clawed together enough revenue to make good the 2012-13 promised return to surplus, although now the budget is forecast to tip just $1.1 billion into the black.
There are some biggish savings - from changing the way large companies pay their tax, reducing the baby bonus for second and subsequent children, reducing the amount the government pays under the private health insurance rebate and freezing discretionary government grants. And there are lots of small ones - the sort of nips and tucks that governments make when finding savings is getting really tricky.
Within this time frame, Joe Hockey's main gripe has been the various accounting methods that have been used to push spending out or pull savings forward to achieve the desired bottom line - tricks that have historically been engaged in by both sides.
But the shadow treasurer is rightly concerned about the ballooning cost of Labor's longer-term promises - beyond the forward estimates - which may be "locked in" or very difficult to get out of if the Coalition wins government next year.
They include the national disability insurance scheme, the cost of which will quickly rise to $8 billion a year, and the Gonski education reforms, which will cost $6.5 billion annually.
These programs start small - for the NDIS, $1 billion is included in the forward estimates for the start-up phase. The funding model for the Gonski reforms is yet to be agreed with the states. But as the Coalition points out, in the longer term, with lower commodity prices eating into revenue, no one is sure how we can afford to pay.
Wayne Swan said today there would be more structural savings measures in next year's budget, to make room for the big-ticket spending.
But the Coalition's case would be a lot stronger had it not opposed many of Labor's recent savings measures that have big structural impacts on the budget in the longer term, such as the means-testing of the private health insurance rebate, which the Coalition opposed, or the freezing of the income threshold for family tax benefits, or the means-testing of the baby bonus - both of which the Coalition initially fought against but in the end supported.
The new cuts to the private health insurance rebate and the baby bonus have similar escalating impacts in the longer term.
And the Coalition's position would be stronger still if we were going to find out its longer-term fiscal projections before the next election, rather than having to wait for commission of audit that would not be constituted until after it was elected.
Swan is struggling to match voter expectations with these straitened budgetary times. Hockey is concerned that mismatch might be even bigger if he gets to be treasurer.