Big problem Labor, Coalition and Greens face in convincing voters on costings that don’t add up

You will see Labor and the Coalition and the Greens put big reassuring price tags on their policies with assurances they are fully costed. But are they? Joe Hildebrand isn’t convinced.

A beloved reader sent me a message this morning: Hey Joe, you are so incredibly cool and handsome and all-knowing about all-things, how come the opposition never release their costings til just before election day?

I may have slightly paraphrased the first part but the second is an incredibly good question and something that very few members of the public even notice, let alone ask.

Election costings are something that is usually left for newspaper journos to desperately tally up each day and economists to roll their eyes at.

Quite frankly, they don’t add up. And I mean they literally don’t add up.

This is true even of governments and even more so of oppositions. And when it comes to minor parties and independents we are talking about numbers that are simply plucked from the air — or perhaps some other darker and less hygienic place.

And that’s because during an election campaign you are always going to want to promise more than you can possibly deliver and so you have to obscure your capacity to deliver as much as possible.

Thus you will see Labor and the Coalition and the Greens put big reassuring price tags on their policies with assurances they are fully costed. But are they?

Is the cost a one-off for a single year or is it recurring? And if it is recurring is it a cost across the forward estimates period — four years — or across a decade, which even the Budget doesn’t pretend to be able to predict?

Often you will see all these numbers rolled into a single figure, even though they apply to completely different types of spending across completely different time periods.

Indeed, the closest you can get to any credible breakdown of spending is the Budget itself, but even there you will see billions of dollars missing for “measures taken but not yet announced” — i.e. election promises.

In other words, it’s all bunkum.

The difference between the government and the opposition, however, is that the government has an army of thousands behind it to cost, crunch and model anything it wants to do, namely the Treasury Department.

This is an unrivalled resource of effectively unlimited manpower and data that is at the government’s fingertips right up until the moment it goes into caretaker mode.

Other parties, by contrast, have to rely on independent agencies like the Parliamentary Budget Office, which compared to Treasury is two blokes and a typewriter, or external outfits such as Frontier Economics, which famously costed the Coalition’s nuclear policy.

In the case of the latter these are guns for hire. They no doubt diligently apply all the resources and methodology at their disposal, but the results have to meet their client’s satisfaction or they will never see the light of day.

And all of this modelling will be based on what are called “assumptions” and if the assumptions are wrong the whole structure comes crashing down.

And so it’s incredibly easy for opponents to commission or conduct their own research that undermines these assumptions and blow holes in them the size of elephants.

This is not the Coalition’s fault or Frontier Economics’ fault. It’s just incredibly hard to predict what, say, a national nuclear power industry in a country that’s never had one, will end up costing decades from now.

And so the example of the admirably upfront nuclear power costings is, ironically, the reason why oppositions generally like to keep their costings as close to their chest as possible until the last possible minute. It gives the government the least possible amount of time to tear them apart.

In fact I remember one state election where they were not released until the night before polling day, with opposition staffers blaming a printer malfunction.

Certain parties might want to remember that one for next time.

Originally published as Big problem Labor, Coalition and Greens face in convincing voters on costings that don’t add up