Abbott's secret plan forces Rudd into error

Joe Hockey’s real cost reduction plan will include Australia’s biggest ever deregulation program. But the Coalition’s strategy has also led Labor into a costly trap.

Kevin Rudd, Chris Bowen and Penny Wong made their 'numbers' mistake because they were trapped by a clever Coalition plot.

And in their frustration they did not pick up on the fact that there is a much bigger Coalition cost reduction plan that was not announced in the Hockey cost estimates.

And that second Coalition plan will transform the nation and put under pressure this week’s Coalition 'hero', treasury chief Martin Parkinson who (with finance department head David Tune) yesterday shredded the Rudd campaign. 

Shadow Treasurer Joe Hockey was able to announce really modest cuts to pay for his promises because Hockey based his revenue estimates on the highly dubious forecasts Treasury and the government made just before the election announcement (The sausage machine approach to budget estimates, August 30).

Frankly, everyone in the Coalition from Tony Abbott down believes the Treasury revenue forecasts are nonsense and the real future revenue numbers are much lower. But Treasury’s inflated numbers made the Coalition’s election campaign cost bridging so much easier.

And the task was made even easier because the government announced a series of new taxes and cuts that did most of the work.

Apart from changes to the motor fringe benefits tax, the Coalition embraced almost all the government measures. While this is not the way the Coalition would have undertaken the task, Australia faces an emergency so it is best for the Coalition to start with the ALP taxes and cuts. When the budget is in better shape some of the ALP measures may be reversed, but that will be in the next term.

The first major cost reduction program that was not revealed in the Hockey statement is the biggest deregulation program Australia has ever seen.

The Coalition has already isolated thousands and thousands of regulations that can be abolished or substantially simplified without legislation. And with each regulation comes a group of public servants that are no longer required. It’s a massive cost-cutting exercise that will boost business around the nation.

The second plan is to bring the states together and rationalise activities. That will mean massive cuts to the federal departments of health, education and environment because much of their work is supervising the states that carry out the work. There is no need to cut services – which is why the Coalition is able to torpedo the Rudd campaign claiming that hospitals and schools will be shut.

The Coalition talks about a 12,000 reduction in the public service through natural attrition. My guess is that the real number is close to double that.

Unfortunately these unannounced cuts will not all go to the bottom line because the revenue estimates must be lowered to embrace realistic forecasts. Accordingly, the extra cuts will in part be required to bridge lower revenue estimates.

This was a very clever Opposition strategy that forced Rudd, Wong and Bowen into the biggest error of the campaign. Strangely, Coalition research shows that the electorate is not that concerned about costing – but they understand when a leader makes a serious error. And that’s what happened to Kevin Rudd. 

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