Spending switch to preserve surplus

THE Gillard government has launched two new savings exercises to keep the budget in surplus.

Julia Gillard faces the media

THE Gillard government has launched two new savings exercises to keep the budget in surplus with Julia Gillard saying yesterday she welcomed the new debate on how to pay for major reforms.

The Prime Minister said the "price of entry" to this debate for Tony Abbott was to meet his Charter of Budget Honesty obligations by having his election costings reviewed by Treasury and Finance.

"Nobody should listen to what the opposition says until it agrees to have its costings assessed by the Treasury," Ms Gillard told The Weekend Australian. "The only way this can be done properly is to have the Treasury do it."

The opposition, after being burnt at the last election, prefers to have its costings assessed by outside independent auditors.

Ms Gillard said Labor would make whatever cuts were necessary this year to deliver the forecast budget 2012-13 surplus.

Ms Gillard's message is that Labor plans a values-based switch in spending priorities and intends to turn the funding debate against the Opposition Leader.

"We are committed to the surplus and we will achieve it," Ms Gillard said.

Last Monday cabinet endorsed a minute from its Expenditure Review Committee to freeze about $2 billion of federal grants. But it has not imposed a further "efficiency dividend" on the public service. The freeze on grants means ministers must return to the ERC for funding approvals.

This is part of a current-year effort to fund program blowouts from refugees and other policy areas. In effect, it turns the mid-year review into a mini-budget.

The second savings exercise is more long-run and aims to finance Labor's bigger schemes running across and beyond the forward estimates, notably the National Disability Insurance Scheme and the modified Gonski schools package.

Ms Gillard intends to make the choice of spending cuts into a political issue.

"We haven't got anything to fear from this debate about funding," she said. "But the opposition has a lot to fear from it. "

The Prime Minister said Mr Abbott would have "no conceivable excuse" for refusing to get his costings assessed by Treasury. "Oppositions that hide their costings do so because they have something to hide," she said.

Ms Gillard made clear that in the costings debate Labor would target the new Newman government in Queensland. "This is the model; this is the template," she said. "My message to the Australian people is that if the Abbott opposition is coming up with plans for cuts, you need to know why they want to conceal them. It is because they are so big and so ugly."

Ms Gillard said she wanted more emphasis on the financing of spending agendas in the next election campaign than was provided during the 2010 campaign.

She has embarked on a campaign to show Labor's ambitious programs in disability, schools, dental and refugees costs can be properly funded.