The Age: Labor’s finances look conventional, manageable. November 27, 2014. Peter Martin
Labor has balanced its books in much the same way as has the Coalition – by finding savings, raiding the budget’s contingency fund and tapping into funds set up for specific purposes, all the time making sure that their promises fell within the purposes set aside for which those fund.
It is spending somewhat less than the Coalition on ongoing promises – $3309.1 million compared to $4781.8 million, and somewhat less on infrastructure – up to $6778.1 million compared to $7671.8 million.
And it is planning to fund its infrastructure spending from the same pool of budget money as is the Coalition, although it has more conservatively estimated the amount available. Because there isn’t enough, each has looked elsewhere. Labor has raided the $7220 million asset contingency fund set aside for big projects such as the East West Link. The Coalition has discovered $3518.8 million available beyond the four-year budget horizon.
Labor faces two problems the Coalition doesn’t. It runs the risk of losing $3 billion if Tony Abbott makes good on his threat to withdraw the money he has advanced for the East West Link, and it runs the risk of paying $1.2 billion in compensation to the East West Link builder if it is held to the terms of a break fee negotiated between the builder and the government.
Its accounts show it’ll have access to enough funds to do both if the worst comes to the worst, but it doesn’t think it will.
Giving advance notice of a tactic he will use to get Abbott to leave the $3 billion with Victoria and have it used for rail projects, Treasury spokesman Tim Pallas said he would release the hitherto secret business case for the East West Link on taking office, a case that is said to be weaker than the case for Labor’s metro rail project.
The Melbourne Metro would cost Labor relatively little between now and the next election, just $300 million for planning which is a fraction of the $9 billion to $11 billion it would eventually cost. Pallas was unable to guarantee that anything at all would be built in the next four years.
Labor has more costing problems than does the Coalition. But the reassurance offered by outside experts include Jeff Kennet’s former audit chief Bob Officer suggests those problems are as manageable as are any government’s.
Peter Martin is economics editor of The Age.