16/07/2013 - 22:10

How much waste is there in Canberra?

16/07/2013 - 22:10

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THIRTY years ago, I started my working life as a graduate economist in the Commonwealth Treasury.

The department had a proud history and its leaders strived to apply intellectual rigour to their advisory roles.

They were also, for the most part, career public servants who looked well beyond the three-year time horizon of politicians.

Providing frank and fearless advice to ministers was never easy, and it seems to have become a whole lot tougher as the political cycle becomes more volatile and the time horizon of ministers gets shorter.

This has become abundantly clear since Kevin Rudd regained the keys to The Lodge in Canberra.

With breathtaking speed, Mr Rudd has announced the scrapping of the carbon tax and the introduction of an emissions trading scheme.

Quick as a flash, he and his inner sanctum have also come up with $4 billion in savings to cover the cost of moving to an ETS.

The scrapping of the carbon tax is undoubtedly designed to neutralise opposition leader Tony Abbott’s calls to ‘scrap the tax’, which is one of his most potent lines of attack.

But it’s also risky for Mr Rudd as it will also give Mr Abbott more ammunition in his campaign to paint the prime minister as a fake, who will do or say anything to win favour.

Looking beyond the politics to the policy substance, the ETS will deliver what many people, including in the business community, had been calling for.

Just a few years ago, when global warming was in the headlines much more than currently is the case, many business groups wanted certainty and saw an ETS as the best way to deliver that.

The other half of this week’s package was a swath of savings – from spending cuts to tightening fringe benefits tax concessions on company cars.

The latter move will affect tens of thousands of motor vehicle owners and generate savings of $1.8 billion over four years.

It is blatantly a convenient way of generating big savings, but makes a mockery of repeated calls for a systematic review of the tax system.

Of course, former treasury secretary Ken Henry chaired such a review just a few years ago, and the unfortunate result was Kevin Rudd’s decision to pluck out the short-lived Resources Super Profits Tax, which morphed into the Minerals Resource Rent Tax under Julia Gillard.

That was an egregious example of how politicians cherry pick policy initiatives with little or no thought for longer term or broader reform goals.

Other savings announced this week left me perplexed.

Who knew there was a lazy $213 million of unallocated funding in the Biodiversity Fund, whatever that is?

Or $143 million of unallocated funding from the Carbon Farming Futures program?

Or $200 million from the Clean Technology Program?

Or $200 million of funding from the Carbon Capture and Storage program that could be deferred?

Businesses and households that carefully watch every dollar of spending can rightly shake their heads in dismay when savings of this scale can be found almost overnight.

Added to that, the government says it will save $248 million by reforming the public service management structure, leading to the loss of 800 jobs, and more efficient procurement of agency software.

These policy changes came in the same week as opinion polls showing that Mr Rudd is suddenly Mr Popular with the Australian community.

Remarkably, the federal election is suddenly a line-ball contest, with pollsters saying Labor and the coalition are neck-and-neck on a two-party preferred vote.

Against this backdrop it is more important than ever for some real rigour to be applied to policy formulation.

Both sides of politics need to be transparent with their plans and their costings.

It is hard to pin down Mr Rudd at the best of times, and that is frustrating.

Nor is it sufficient for the Liberals to stamp their newspaper ads declaring their policy plan is fully costed and fully budgeted.

Premier Colin Barnett did that during the state election, when promoting his big-ticket infrastructure priorities, and got caught out.

This should not be repeated.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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