By Tim Colebatch
At every election, there's the same old debate. The government, Coalition or Labor, accuses the opposition of making reckless promises that would smash the budget. It demands that the opposition submit its policies to the departmental officials for costing, and the opposition refuses.
In 2010, it was Labor accusing the Coalition of promising more than it could deliver, and failing to submit its policies to be costed by the Department of Treasury and Finance. This time the Coalition accuses Labor of the same crimes.
"Daniel Andrews and Labor have failed to submit any policies to Treasury for independent costing," exclaims Treasurer Michael O'Brien indignantly. "Why won't Labor come clean on the cost of its policies to Victorians?"
Labor, Mr O' Brien claims, has already made "made more than $32.60 billion of unfunded promises . . . Victorians want to know, 'Where's the money coming from, Dan?'. Higher taxes? Higher charges? More fees? More fines? More debt? Putting the budget into deficit?"
Shadow Treasurer Tim Pallas is not an excitable chap, in fact we rarely hear of him.
He just pads up and denies the Treasurer's criticisms, insisting that Labor's promises don't add up to $32 billion, they're not unfunded, and he will release Labor's costings before the election.
"When last in government, Labor maintained a AAA credit rating and healthy surpluses every year in office, and we will do that again if elected," Mr Pallas says.
"All our commitments are fully funded and costed".
And, of course, both sides insist, hand on heart, that if they are elected, there will be no new taxes or tax increases. Of course not.
It's became a ritual, but I confess that I used to take it seriously. Why shouldn't oppositions have to explain to us where the money for their promises is coming from? Why shouldn't they submit their costings to the Department of Treasury and Finance, so that we know whether the numbers they claim are correct?
There's good reason for that: take Southland station. In 2010, the Coalition promised to build it by now for just $13 million, complete with lifts, waiting room, bike cage, bus interchange and waiting/drop-off zones. The Labor government warned us that estimate was far too low, and it was right. So we still have no Southland station, and now the Coalition promises to build it for $21 million, but with none of the facilities it promised in 2010, without even a toilet or car park.
In 2010, the Coalition told us that its tough sentencing policy would add just $46 million a year to prison costs by now. The budget papers then didn't tell us what they expected prison costs to be in 2014-15, but now they show that annual running costs have risen by $455 million, or 71 per cent, since the Coalition took office – and that doesn't include the $945 million of capital spending so far to build new prison cells.
Getting the sums wrong in opposition can affect what a party can do in office. Oppositions should be entitled to expert assistance in preparing their costings – as under the system the Gillard government introduced in Canberra, at the insistence of independents Tony Windsor and Rob Oakeshott. It allows an opposition to take its policy plans for costing by the Parliamentary Budget Office, long before the election, so that it can come to voters with plans costed by experts.
That was a huge help to the Federal Coalition in opposition – and for that reason, the Napthine government cynically refused to allow the same system in Victoria, opting instead for the farce of the same old costings debate.
Mr O'Brien knows that oppositions never submit their policies for official costing during election campaigns – what good would it do them? They hold back their own costings until just two days before the election, when we're all bored with the whole thing, and it's too late to become an issue.
And Mr Pallas knows that no opposition has ever lost an election because it failed to explain how it would pay for its promises – and that, after an election, the issues raised in costings debates are rarely heard of again.
Labor has been working out its costings with the help of global accounting firm Moore Stephens. But there will be mistakes, as the Coalition made in 2010, because while the government uses taxpayers' money to buy it the best possible advice, it will not allow the same for the opposition.
That may be why the Department of Treasury and Finance now estimates that to extend the South Morang rail line to Mernda would cost $700 million, not the $400 million to $600 million Labor estimated. That could become Labor's Southland station – and no doubt it could build it more cheaply than Treasury says, if it leaves out the lifts, toilets and car parks, and builds just a single line track.
We all know that what parties promise in opposition is not necessarily what they will do in government. The same is true on fiscal issues. In government, campaign promises are adapted to fit the funds available. Priorities are set: prisons are expanded massively to accommodate those sent there under tougher sentencing rules, but Southland station is put off, then scaled back to the bare bones. It would be the same with Labor.
But what if the economy goes bad over the next four years – as it might, with the demise of the car industry forecast to cost Victoria 33,000 jobs, at the same time as the mining investment boom goes bust, and possibly the world economy suffers a big shock, such as China's huge real estate bubble deflating? What would either side do in government?
If they give priority to staying in surplus, they would have to either slash spending, or raise taxes and charges, or both, making the economic downturn even worse. If they give priority to supporting the economy, then they would have to abandon their surplus pledge, and go into deficit as other states do.
And what if the Abbott government carries out its threat to cut $80 billion from education and health grants to the states? Would either side agree to raise the GST rate, and/or widen its reach, as Prime Minister Abbott intends?
We can only guess at what might be coming down the track, and how a Labor or Coalition government might respond when it does. The costings issue is just one of many known unknowns out there.
Tim Colebatch is a former economics editor of The Age, and author of the recent biography, Dick Hamer: the liberal Liberal.