Thursday, August 15, 2013

Election 2013: Day 11 (or, my thought bubble is more concrete than yours)

And so today Kevin Rudd hoped on a plane and went north with a plan. He was the man with a plan. And being a man with a plan in a plane heading north is a good thing.

Unfortunately it seems the plan was something he only bothered to come up with on the actual plane flight.

He, like Tony Abbott before him, saw a vision of a new North – a north that is going to tap into the growing middle class of China.

All good. So what is he going to do about it?

Three things. First he is going to

  • Expand the Ord Irrigation Scheme Stage 3 by providing $10 million to the Northern Territory Government to help facilitate expansion of the Scheme from its current 29,000 hectares to 43,000 hectares. This will increase economic output in northern Australia by an estimated $150 million every year, mainly through expanded sugar production and agricultural crops.

OK. Now I have written a number of times before about boondoggle plans to make northern Australia into Asia’s food bowl.

Northern Australia will never become a food bowl in the sense that it will, as Andrew Robb wrote, “double Australia’s agricultural output”.

The most recent report on the issue of Northern Australia was handed down in 2009 by the Northern Australia Land and Water Taskforce (set up by John Howard as a sop to the Nationals and Bill Heffernan), It stated:

The north is not a vacant land. It needs to be actively managed for resilience and sustainability, based on a contemporary and informed understanding of the complexities of the landscape and its people. Contrary to popular belief, water resources in the north are neither unlimited, nor wasted. Equally, the potential for northern Australia to become a ‘food bowl’ is not supported by evidence.

murrumbidgee irrigation farm sizeAnd when it came to speculation home much land could be “opened up for farming”

The potential for growth in groundwater irrigable land in northern Australia is
estimated at between 100 and 200 per cent, or around 20 000 – 40 000 hectares.

And it attached to that a number of risks.

To put that size into context, the Murrumbidgee Irrigation Area is around 660,000 hectares, of which 120,000 hectares is irrigated. And if you look at the map above, you see that is only a small fraction of the Murray-Darling basin (which of course is not all farm land, but it gives some good perspective).

So at least Kevin Rudd is not off with the fairies and talking about doubling our food production.

He also talked about

  • Develop twenty-year growth plans for the regional hubs of Darwin, Cairns, Townsville and Mackay. Infrastructure Australia will oversee these plans, based on the successful Mount Isa to Townsville Economic Development Zone supply chain model, developed in collaboration with the private and public sectors. These plans will target key industry sectors and include strategies for increasing trade, investment and employment in these regional centres.

Sounds good. Anything developed through Infrastructure Australia gets my tick of approval. But it is all a bit, “we don’t know really what we’re going to do”. He probably should have had Anthony Albanese along, because Albo would be reeling off a number of projects that he probably has on a list that he keeps under his pillow.

There’s also not a lot of meat here. Nice sentiments, but, you would hope a bit more from a party currently in Government.

This is one of the problems with changing a leader so close to an election –especially if you want to come up with different policies. It means you can’t use the incumbency in your favour.

Remember those trades centre announced yesterday? That was not an election promise – that was actual money that is going out. It was a Government announcement that Rudd was able to badge as a campaign issue.

Same deal with the after-school care announced in the first week. It was budgeted and is now going out. The Liberal Party will have to actually stop it if it doesn’t want to spend the money.

That is what good political operators do. They spend the last 6-9 months before an election using the public service to cost and develop policies and programs, put a few in the budget as “decision taken but not yet announced” and announce them in the campaign.

You also announce all these whiz-bang policies that are well formed and developed, because for the past 6-9 months some bright sparks in the public service have been working on them!Howard was great at using the public service. He knew better than probably any politician before him how to use the power of incumbency.

No Prime Minister should turn up during an election and announce something that sounds like a thought bubble. Julie Gillard did it last time when she came out with the cash for clunkers and people’s assembly.

And Kevin Rudd did it today. Because the third thing he announced today was this:

  • Create a Northern Special Economic Zone focussing on the Northern Territory to attract new Australian and foreign investment through simplifying investment rules, streamlining regulation and application processes for major projects, and introducing new tax incentives with the objective of reducing the company tax rate for Northern Territory based companies in five years.

A lower company tax rate for NT based companies.

The best response to this was a tweet by economist Richard Green (who blogs for Club Troppo)

Anyone think every major organisation who can employ a decent tax lawyer won’t set up a HQ in Darwin that does just enough to ensure its business operations qualify for the lower tax rate?

Kevin Rudd backs 20% company tax rate for Northern Territory - World news - theguardian.comThat is not producing an economic boom, that is just shifting capital, and reducing the revenue collected by the government at the same time.

It was a dumb idea when it was floated by free-market ideologues from the IPA, and it is still dopey. The IPA wants it because it’ll end up with less tax collected and hopefully set off a spark whereby the company tax rate gets lowered everywhere else and then perhaps lowered in NT again and then…. Gina Rinehart wants it because she’ll get to pay less tax just by shifting here HQ.

But what the hell is an ALP government doing proposing it?

Geez. Next Rudd will come out in favour of income splitting tax returns.

Worst of all is he didn’t seem to have a clue about the details. He had no idea how much this would cost, and even how low the rate would be and whether it would apply to Darwin based or Northern Territory based companies. The media release talked of “reducing the company tax rate”, but then Rudd off the top of his heads talks about “by a third” – so to 20% – but this was just his hope.


There is no way in hell this policy was worked over by boffins in Treasury. And we know this because just a couple months ago the Gillard Government was quite rightly calling it a boondoggle.

But Rudd had a thought bubble I guess.

All this to try and win Lingiari?


And it was a dumb day to have such an uncosted thought bubble, because Tony Abbott was in Tasmania announcing the next step of his plan for Tasmania.

Among the plans was extra money to lengthen the Hobart Airport to allow it to service 747s and the like, and also a “one stop shop” located in Launceston for approvals for major projects. This Tasmanian Major Projects Approvals Agency sounds all well and good. Though it does seem an odd move for someone who wants to cut the public service to create a new agency, so it will be interesting to see if it will be done by trying to transfer people from Canberra.

It says it will try and makes this a one stop shop for both Commonwealth and State approvals. Which sounds a bit like it needs state government support. And given his stated aim of giving the state the right to tick off on any environmental concerns, I’m not sure how it all fits in with that.

But overall the policies at least had the whiff of intelligence about them. They sounded like things being done. The was an overall shape to them all.

And then at the press conference Joe Hockey put in one last sound-bite:


Well, we have always said we will release the full costings before the election, well before the timetable that Labor has had in the past.

I just say to you, if the whole election is going to be about costings rather than about policies like we are announcing today then I think everyone is going to bore the Australian people to death and we don’t want to do that, we won’t them to be excited about the policy initiatives, but believe me all of our policies and all of the costings and the ways we are going to pay for it. All of it is going to be out there verified and in net terms provided to the Australian people before polling day.

You have to love the wannabe Treasurer of Australia saying policy costings are boring.

He’s right though – policy initiatives are the exciting thing. Everyone wants to do that. Heck I could go out on the hustings right now and promise everything from high speed rail to double carriage highways across Australia and a second airport in Sydney.

Look at me! I’m doing policy!!

That’s the easy part. The hard part – as Kevin Rudd showed today – is the costings, and that is why they are important. If your costings are dodgy then the policy is dodgy.

The only reason this is an issue at all this time round is because in 2010 the Liberal Party absolutly ballsed up the costings. They treated everyone like mugs. The best they showed us was a spread sheet with numbers on them that correctly added up to a total number

That is not costings.

Heck I can do that. Watch:


1. High Speed Rail from Sydney CBD to the Bradman museum in Bowral (because Richie Benaud says, ‘gosh it’s interesting’, so we need to get there fast): $5 billion.

2. A giant wall around the north coast to keep undesirable people out and put me onside with voters who say they aren’t racist and they really only care about people drowning at sea: $6 billion

3. Free beer at Christmas for those who can’t afford to buy those Tap King things: $7 billion

TOTAL COST: $18 billion

Wow. And here I thought it would be harder to run for government.

Costings are not about adding up the final numbers, it is about working out what the number should be and why. And it needs to be done by someone who you are NOT paying to come up with a nice figure for you. 

Take the Greens. They are thus far the only party to have had any polices fully costed and released by the Parliamentary Budget Office.

Here for example is the costings for their “Improved Mining Tax

Improved Mining Tax 1.ashx

Improved Mining Tax 2.ashx

Improved Mining Tax.ashx

And there we have it – the policy, the assumption made and then the cost (or save) to the budget). We can challenge the assumptions – indeed that is where most of the argy bargy lies, because the costing are made on the basis of the assumption.

If we don’t like the figures, we have to find issue with the assumptions – ie the diesel rebate ain’t going to get removed, so fughgeddaboudit.

But we can trust that the figures are not dodgy, because they were not worked out by anyone who has any reason to give the Greens better number than there really is.

(As an aside, as someone who wrote about the legislation of the PBO in my third ever Drum article in which I chided the media for ignoring the legislation, I am quite happy to see it being used so extensively).

The costings don’t suddenly mean the policy is good. But at least the argument has some degree of reality involved.

Now the Liberal Party has apparently around 200 policies with the PBO. That is great, but it is time to start releasing them. Sure some things are dependent on the PEFO numbers, and may take a couple more days. But today Abbott announced $38m for the extensions to the Hobart airport. Fine show us the costings. Show us the document that displays that a third party has looked at your policy and said, yep $38m will cover it.

There is no more reason to wait.

Tony Abbott tonight on ABC’s 7:30 again talked about “in good time” before the election. That good time is now, not later.

Because the longer he leaves this, the better the ALP new advert looks:


And the first policy he can shows us is his Direct Action Plan.

Today the Climate Institute released a report on the Direct Action Plan which suggested the Libs were about $4b short.

And having read the report, I think that’s a conservative estimate. They made some very conservative assumptions which will unlikely occur and which if they didn’t would lead to higher costs. As was noted Tristan Edis of Climate Spectator, the assumptions that the companies bidding for contracts will do so based only on their costs rather than on what they think has become the going rate; that it will be able to start by July 2014; and that all bidders will deliver on time and on budget are pretty generous.

The thing about the Direct Action plan is it is a plan whose purpose is not to reduce emissions but to look as if the Liberal Party wants to try and reduce emissions. The only person who might think the Liberals can get to their target of 5% reduction in CO2 from 2000 levels with the money they’re spending is Greg Hunt.

Tony Abbott certainly isn’t so dumb as to care; he knows the policy is just a show – one that he can slice and dice once in government to suddenly find savings. It is designed to appeal to people who don’t like the carbon tax, but kind of think we should at least be trying something, and it;s also a policy that doesn’t offend those who think Climate Change is … crap..

But today Greg Hunt came out and said the Climate Institutes report is silly and that it was done by a partisan organisation.

Now that is fair – they certainly do favour action on climate change and would prefer a price on carbon. But where is your policy? Show us your assumptions, let’s put them side by side with this report and let’s see who is making the more realistic case.

The aim of the Direct Action plan seems not to be to reduce emissions but to spend $3.2 billion on reducing emissions. Any suggestion that it might cost more is met with the response that it is capped and no more will be spent.

It’s a bit like saying you plan to spend $50 million to build a bridge and upon being told that will only get you three quarters of the way, saying, ‘Well that’s all we’re going to spend, we will not have a blow out of costs’.

Tony Abbott doesn’t care if we don’t get to 5% by 2002. 2020 is three elections away.

The latest Direct Action policy is the 2010 version. Is it still the same? If so bring it out and show us that the costings within have been made by an independent party. Until then you got nothing but dreams and idle desires.

But it could be worse. You could have just announced a company tax cut and you’re not even sure how much the cut will be.


And look it could all be worse than that. You could be the journalist who asked Tony Abbott this question:


[You chose] the song ‘Hot and Cold’ to be your anthem. Are you fully aware of the lyrics? “You change your mind like a changes clothes” “You say yes but you mean no”, “got a case of love bipolar” Do you think that is the best anthem for you as Opposition Leader?


Anonymous said...

Thanks Greg. I'm working overseas and will be doing so throughout the farce in Australia. Actually the more I read about it, the more I despair for my country that used to be so brave and forward looking, whose very soul is now visibly withering on the vine and shrinking like an old man towards death.
So much potential and such waste of it.

Jaeger said...

"[You chose] the song ‘Hot and Cold’ to be your anthem. Are you fully aware of the lyrics?"

You didn't like that one? I thought it was a very astute observation.
"Tony Abbott, your campaign is being run on style over substance; is 'Hot and Cold' a reflection of your style?"

2353 said...

I would have thought that Abbott's "theme song" should have been the one they are currently using to flog off Camrys - "Its hip to be square".

Thanks for the almost daily election blog Greg - it is really appreciated.

Craig said...

Hi Greg,

Where can I vote for the Jericho party?

Greg Jericho said...

Craig - the free beer policy seems to have polled well in the electorate