Joe Hockey refuses to commit to final budget total

Lenore Taylor, political editor

theguardian.com, Tuesday 6 August 2013 14.20 AEST

Exclusive: Shadow treasurer will not produce final forecast of deficit or surplus because Treasury projections are 'not credible'

[Side comment: How does the future(?) Treasurer propose to work with a Treasury department that he does not trust as being “credible”?]

Joe Hockey is refusing commit to a final budget bottom line. Photograph: JULIAN SMITH/AAPIMAGE

The Coalition is refusing to commit to a final budget bottom line when it releases policy costings because it does not believe the Treasury figures released in Friday’s economic statement.

The shadow treasurer, Joe Hockey, told Guardian Australia that individual Coalition election policies would be “fully and rigorously costed” but adding them up to forecast a final budget deficit or surplus would be “meaningless” because the starting point would have to be the Treasury’s projections, and they were “not credible”.

Labor has been desperate to draw the Coalition into a debate about costings because Tony Abbott has yet to announce potentially unpopular spending cuts to pay for the policies he has promised.

“Voters will know exactly how much our policies cost and how they will be paid for, but we do not accept the bottom line figures released on Friday. They are not credible,” Hockey said. “These numbers just look stupid so we won’t be adding up our policies. It would simply produce a meaningless document if we were to do that.”

The Coalition’s concerns about the budget forecasts come as Kevin Rudd mounted an attack on Hockey for suggesting Tuesday’s anticipated official interest rate cut by the Reserve Bank might not be unequivocally good news.

Rudd accused the shadow treasurer of making an “absolute clanger” and administering “a kick in the stomach to Australian families” for suggesting that an interest rate cut should not be necessary and was only likely because the economy was slowing.

“He’s effectively saying, ‘It’s OK, you can have higher interest rates’ … that’s an appalling statement,” Rudd said.

Hockey had said earlier on Monday: “The fact of the matter is, we should not be in a position where interest rates are being cut because the economy should be growing faster and that's what the government said was going to happen and they got it wrong and they keep getting it wrong.”

He told Guardian Australia he had been “stating the obvious” and that interest rates would not be cut below emergency levels unless there were concerns about the state of the economy.

He said: “Kevin Rudd has no idea what he is talking about. Of course it’s good news for mortgage holders, but if he thinks an interest rate cut is good news for the economy then he is proving himself to be an economic illiterate.”

Markets are strongly anticipating a rate cut of 25 basis points, that will take official rates to a 53-year low of 2.5%. Some have suggested the cut may be 50 basis points.

Industry has been calling for a rate cut because, as confirmed by Friday’s statement, economic growth is slowing. It forecast growth of 2.5% in 2013-14, down from 2.75% in the May budget.

But cost of living pressures are also central to the election campaign, and the government sees the likely rate cut as good news for its campaign. Before parliament was officially prorogued on Monday it targeted cost of living concerns with an announcement that it would provide an extra $450m for before- and after-school care services to provide new places or new care programs.

Labor also announced $200m for the car industry, which will provide rebates either to car companies selling to private car fleets or to the car fleets themselves if they buy Australian-made cars.

The $200m is for two years of temporary urgent assistance and is in part necessary because of the hit to car sales from the government’s previous decision to save $1.8bn by cracking down on the rules for company car drivers claiming fringe benefit tax (FBT) concessions.

Labor will also ensure commonwealth agencies “buy Australian” for their car fleets. Rudd said if state and local government followed local car production could be boosted by 12%.

“I would call upon every level of government to do the same. In Queensland, the current fleet purchasing arrangements I think are down around to 26%, 30% or maybe 32% of their entire fleet comes from Australian-manufactured vehicles. WA is much the same, very low. I say to those governments, lift your game. I say to local governments, lift your game. If we do that, we can add together probably 12% on top of current units being manufactured by the Australian industry,” he said.

Abbott said the $200m amounted “to a band aid on a bullet wound”. The Coalition would not proceed with the FBT changes but would itself cut $500m from automotive industry assistance by 2015, and has announced a productivity review into what assistance would be provided after that.

Asked about Hockey’s comments, Abbott repeated his promise that the Coalition would be “fully costing and fully funding all of our commitments”.

Asked whether the Coalition would be calculating what a deficit or surplus would be under its administration, Abbott said “you’ll be able to do the arithmetic and see the budget bottom line will be better under the Coalition”.

The remarks appear to be in line with Hockey’s statement that the Coalition itself would not be adding up the budget impact of its spending and saving promises to commit to, or forecast, a final budget deficit or surplus because the calculation would have to be based on the treasury projections that it did not accept.

But Rudd claimed Abbott had “overruled” Hockey’s statements on the budget bottom line, and that this proved the Coalition’s economic management credentials were “a shambles”.

He also said the Coalition’s position was a “stunning development” and “unacceptable in a democracy. Warts and all, we've put our bottom line out there with the economic statement last week," he said at a candidates forum in his Brisbane electorate of Griffith.

"What we'll spend, what we'll save, what the bottom line is, when we'll come back to surplus, it's there ... The stunning development in the past few days has been Mr Abbott's treasury spokesman saying that in this election campaign, the Liberal Party will not put forward its own budget bottom line.”

It is unusual for the Reserve Bank to move rates during an election campaign. The last time it did was November 2007 when it raised rates for the sixth time since the 2004 campaign when then Prime Minister Howard had promised to keep rates low.

The Coalition was angry and Howard said later the move was “unnecessary and provocative”. He said: “I don’t think any violence would have been done to pure economic management if the decision had been put off until December.”

The Coalition has said its budget position “will always be stronger than Labor’s”. Hockey has said he will use the new Parliamentary Budget Office, as well as independent experts and advisers to help cost Coalition policies.

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