Friday, September 3, 2010

Labor’s black hole is far deeper

In ordinary times, this would be the final straw - and not just for the independents who claim to be so concerned with black holes and competent government:
The ... three companies, which negotiated the revised deal and would supposedly pay the vast majority of the new tax, believe it will cost them only a few hundred million dollars extra each year.

That adds up to only about $1bn a year in total from them in contrast to the $5bn to $6bn a year extra predicted by Treasury and promised by Labor…

It also makes the arguments and accusations over Coalition costings look modest by comparison. The difference is that Labor can rely on official Treasury backing for its figurings.
Some of this ($10.6 billion costings “hole") reflects the inevitable “different models and data”, as Treasury concedes. But the Coalition has made mistakes that should have been avoided… And if Gillard wins she will lay this charge around Abbott’s head for the next three years to ruin him…

The reality, however, is that the budget policy of Labor and the Coalition, measured by Treasury estimates, is near identical. Treasury says that over the forward estimates the Coalition improves the bottom line by $863m compared with Labor’s improvement of $106m, though in the final two years Labor’s surplus is bigger…

The independents need to be careful: any effort to tie costings to the issue of confidence when both sides have a similar bottom line would seem bizarre and Labor’s first-term financial blunders have been so high profile.
The real strategic blunder of the week was Gillard’s deal with the Greens:
In a sense the deepest insight from the week is Gillard’s commitment to a Labor-Green alliance, precisely because it was so unnecessary… It is Gillard taking ownership of the Labor Party: a decision driven totally by politics, not any pro-Greens sentiment. Its motive is to show that Gillard is the arch interpreter of the new politics, prepared to compromise to secure the numbers.

In this deal Gillard surrenders little of substance…

(But) Gillard has invited the Australian public to see and judge Labor as the party in alliance with the Greens, a movement it cannot control, whose values are sharply different from Labor’s. If Abbott is consigned to opposition he will crusade on this strategic blunder for the next three years.

Posted via email from Garth's posterous

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