Election 2010: Day 33 (or Oh, Rooty Q, I love the way you talk)

Today was about two things – the Liberal Party releasing its costings and the people’s forum in Brisbane (or as it was known on twitter “RootyQ” – on reference to this being the Queensland – “Q” – version of last week’s Rooty Hill forum).

The Libs put off releasing the policy till 4pm, and it was then delayed till 4:45pm, which didn't really please the journos who were going to have to file stories for the 6pm news.

It turns out the Libs are going to have a bigger surplus than the ALP. That they left off releasing this information till the last night of the campaign in which adverts are allowed – and also the one night of the week where the ABC dominates the ratings with Spicks and Specks, The Gruen Nation and The Chaser makes me suspect two things:

1. they aren’t all that confident in their figures standing up to a stack of criticism, and
2. they don’t really think people care too much that they will have a bigger surplus.

The interesting bit of information from the press conference with Robb and Hockey (Abbott of course was no where to be seen given it was about economics) was that the Libs had hired the accountancy firm WHK Howarth about 2 months ago to do the costings – which kind of puts the bullshit about them not submitting them to Treasury because of the leaks into its proper light . They obviously never intended to go through with the complying to the Charter of Budget Honesty. Now they may be right to do so – the charter is a bit of a crock – but their excuse is as well.

The Farifax’s Peter Martin tweeted on the costings:

Costings just one line per item - no assumptions, no reasoning. Treasury and Finance would have provided a touch more

***

Tonight’s RootyQ event was a marked improvement on the Rooty Hill version. Both leaders were denied a cheer squad. There were some excellent question, there were some “what will you do for me questions”. 

Abbott went first, and highlighting the advantage of going last, I can scarce remember what he had to say. Julia was good – she tackled the questions about Rudd well, and explained the stimulus as well as she ever had.

I doubt it will have changed a vote. Bugger all will have watched it – ABC24 hardly rates, and Sky News again will get its 90 odd thousand. It will however have done Gillard no harm in Queensland, and likely some good – though it will be interesting to see how the Courier Mail covers it. You could argue because it was in Queensland and because she did so well that she might have really picked up some votes, but again I say not enough people saw it.

Abbott, by virtue of the fact he was supposed to love this format, didn’t go as well as hoped – mostly because there wasn’t the cheer squad factor this time. But he probably didn’t lose any votes either. I seriously doubt he would have won any – especially when he said “$100,000 a year is not rich”.

So was it worthwhile? Yes. But really it would have been much better for them to have been on the stage at the same time.

Two more full days to go before the vote. Julia will be at the press club tomorrow in which she will say absolutely nothing new.

Barring anything unexpected occurring, this campaign is looking pretty much done and dusted.

***

Today Nicholas Gruen released some very interesting research on the impact of the stimulus. One of the things about the stimulus is the number of jobs it saved, but what is often left out is the impact those jobs have on actually helping keep debt down. Gruen noted that those people whose jobs were saved quite obviously kept paying tax – both income and consumption. But how much have the taxes from those whose jobs were save contributed to paying off the debt? Well Gruen found that

“For every dollar the government spent, tax revenue to Australia’s governments rose by around 22.5 cents, leaving just 77.5 cents to be repaid.”

So the income tax from the people whose job were saved contribute to nearly a quarter of the costs of the stimulus.

When looking at the infrastructure spend Gruen found similarly that:

Every $1 of government infrastructure spending increased output by $1.20 generating 36 cents of government revenue.

What this means he notes is that:

For each dollar of stimulus the Government spent on infrastructure, the debt incurred was only around 64 cents.

All up this means:

Of the $26.5 billion dollars of infrastructure budgeted to be funded in the years 2008-9 and 2009-10 Australian taxpayers will need to service and/or repay only around $16.9 billion of debt via state and federal taxes.

Gruen even takes into account the fact that under the BER scheme there were inefficiencies due to the rushed nature of the work that in turn raised costs. So was this a drain on the budget? Well no. He finds that because the stimulus generated tax revenue that vastly outweighed the “waste” of the BER speediness:

Those inefficiencies cost around $1.5 billion compared with the tax windfall of $9.5 billion from tax collected from who would not otherwise have been employed. The net result leaves Australians better off by around $8 billion.

The important point is this – the stimulus worked. Let’s just say that again. It worked. It worked incredibly well – far better than ANYONE dared hope.

It worked because it was rolled out as fast as possible and thus it saved jobs before they were los. It is much, much harder to get people back to work than it is to keep them working. And those people whose jobs were saved are helping pay back the debt.

In the 1990s recession the stimulus package under the Keating Government came far too late to save jobs, and thus the debt that was incurred was not being paid back by people whose jobs were saved, and thus the debt was greater, and the stimulus less effective. The lessons of the 1990s were learned and applied in 2008-9 – and they worked.

Yes there was waste – but the waste of not acting fast is much greater. As one who attempted to enter the workforce for the first time in the early 1990s I can also tell you the long term costs are also much greater. I did an economics degree – I even had a honours in it. But by the time the economy picked up I was competing with another 2 years worth of graduates, and also experienced people coming back into the industry. I had hoped to become a dealer on the foreign exchange markets – the subject I enjoyed most in my honours year was “international finance”. Well I did end up as a dealer – a blackjack dealer. You do what you have to do. And my 4 years at university were for nothing. I finally paid off my HECS debt for that degree last year…

The stimulus was timely and targeted. Yes there was some waste of Government expenditure because it was so timely. But the waste of waiting and seeing, of taking time, of allowing confidence to decline would have been far greater – both in budgetary terms and in that of human life.

The only bad thing from the RootyQ forum was Julia locking herself into a surplus in three years time. She should NEVER do that, and the media should NEVER expect her to have to. When things go down the toilet, the Government SHOULD go into deficit, and when things are good, you go back into surplus.

That neither Abbott nor Gillard will talk about the prospect of a stimulus package should the world economy go into a double dip recession is a major falling of both them.