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Why neither political party can afford their grand plans: Kohler

Engel Schmidl /

Much of the criticism of the Prime Minister is shallow, hysterical and/or sexist, but she deserves everything she cops over this week’s education policy announcement.

It was little more than a political stunt – a desperate attempt to use rhetoric to try to regain some political initiative. After nine months of considering the Gonski review of school funding, nothing has been achieved beyond copying some of the report’s words into a press release.

Education is a state responsibility yet none of this plan was discussed with the states before this week, despite repeated urging in the Gonski report to do so.

Suddenly, despite endless rhetoric to the contrary, both sides of politics are throwing fiscal caution to the wind. Labor is Whitlamesque in its unfunded social ambitions, while the Coalition potentially has its own unfunded grand ambition with climate change.

It is plain that tax revenue will now decline with the terms of trade; the only question is how big the budget deficit is likely to be this year and beyond. Yet we now have a $6.5 billion education plan, an $8 billion National Disability Insurance Scheme, an extra $5 billion a year to house and process asylum seekers and $4 billion for dental care.

That’s $23.5 billion per year in extra spending before we even start the election campaign. These things are all worthwhile, but it’s totally irresponsible to announce them with no clue about where the money is to come from. The PM could add that Australia will land a person on Mars by 2050, or build a bridge to Tasmania – it’s meaningless without the funding.

Likewise the Coalition’s climate change policy. Two problems: Tony Abbott apparently wants to ditch the tax and keep most of the compensation, at a cost of tens of billions of dollars, and also wants to achieve the same result as the carbon tax and emissions trading scheme by “direct action” – paying companies to cut emissions, rather than taxing them when they don’t.

This plan is no less irresponsible than the government’s $23.5 billion list of big-ticket social items, something Abbott attempts to cover by extravagantly blaming the carbon tax for every problem the nation has.

Vague savings will be found to pay for the tax-free compensation and fill the so-called black hole, while the “direct action” plan to reduce carbon emissions will cost $10 billion year, according to the Coalition. That’s a guess, and laughably conservative – it’s said to be based on a price of $10 a tonne, which will be nowhere near enough.

So almost a year out from the election we have both sides of politics entering a period of falling tax revenues and probable deficit budgets with huge spending commitments. It’s enough to make you want to move to Spain, where at least the government is trying to get the deficit down.

As for this week’s education funding plan, it is but a wee shadow of Scotland’s School Act of 1696 – the first universal education funding policy.

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