Labor leaders' claim of $83bn in savings is dishonest

THE Prime Minister, the Treasurer and the Finance Minister have all, in the last four months, made the claim that the government has instituted $83.6 billion worth of "savings" since being elected in 2007.

It sounds like an extraordinary effort to make that large an amount of cuts in just three budgets, suggesting the trio would be better placed as hard-edged management consultants walking into businesses in distress and streamlining their operations with brutal cost-cutting measures.

But the trio would only be suited to such an alternative career path if the savings they refer to in the budgets are genuine savings, which they simply are not.

When Julia Gillard, Wayne Swan and Penny Wong claim Labor has instituted more than $80bn in savings, they are including tax increases, deferments to programs, extra dividends demanded of government-owned enterprises and even depreciation. In fact, they include any and everything involving changes in priorities in the budget.

Not only is it misrepresentative to refer to the $83.6bn in adjustments as savings, but those adjustments in many cases haven't even happened yet. They are projected adjustments for future budgets. In other words, even the hard task of cutting costs when it happens has been deferred for future budgets even though the government is taking credit for it now.

It's a bit like claiming credit for a weight reduction exercise regime after your trainer hands you the 12-month plan but before you have actually started running.

And some of the so-called savings (which are actually tax increases) haven't even been legislated for yet, such as the controversial mining tax where economists can't agree on the accuracy of the projected tax receipts and political analysts aren't certain Labor will even get the Bill through the parliament.

But getting back to the particulars of what Gillard, Swan and Wong claim as savings, nearly half of it, $41bn, is made up of what the budget papers refer to as "major revenue measures", remembering that the list includes future measures, not only ones that they have already instituted.

When you go through the inclusions in the proudly spruiked list of "tough decisions", it includes the following: a $2.4bn increase in the crude oil excise; increases in tobacco taxes of $4.75bn; $2.8bn increase in excise and customs duty on alcohol; fringe benefits tax increases totalling about $1.1bn; visa application charges up by $580 million; an increase in the passenger movement charge (whatever that means) to the tune of $460m; $275m by taxing ethanol more; a one-off dividend from Australia Post of $150m; and $84m by putting up ASIC fees for businesses. That's just for starters.

Added to the above list of tax increases and dividends clawed back from government companies is the big one: $11.9bn for the super-profits tax on the mining industry. But that is based on modelling we aren't allowed to see and projections on commodity prices that may not hold, with the major revenue collection not coming until the 2013-14 financial year -- assuming the tax legislation passes through the parliament.

Few people would consider the above savings and, it seems, as of Monday, maybe the Treasurer no longer does either. After months of claiming what I have listed as savings in his impressive $83.6bn total, on ABC radio he pulled back from the claim: "In three budgets and two mid-year reviews we have already found and changed priorities in our budgets to the tune of $80bn."

"Found and changed priorities" -- that's more like it: an honest description of what had previously been a dishonest manipulation of what the government is doing.

The problem is that just as Swan has started to modify his language to avoid misrepresentations, the Prime Minister is becoming more dishonest with her's.

On the Ten Network's Meet The Press on Sunday, Gillard said: "I want to reinforce this point, we have already made as a government more than $80bn of savings since 2007".

And Gillard wonders why she isn't resonating with voters: it can happen when you use rhetoric to try to deceive them.

Perhaps Swan should have a word with her and let Gillard know that the gig is up and she should correct her language to avoid the embarrassment of getting caught out calling adjustments savings.