The Splurge in Crikey

It seems that everyday someone wants some commentary on the latest election news. Today’s is about the ‘Splurge.’ Turns out it was not all bad.

A big price tag for campaign — but not much silver lining

Crikey, 13th November, 2007

Joshua Gans writes:

This election has been a worry to me. So many promises, escalating spending and tax cuts, and short on details of continued reform. The big issues – the environment, what to do about Telstra, health and innovation – have been more about goals than specifics. The hip pocket stuff is a scrambling for attention although with some useful ideas such as Labor’s moves on housing affordability and early childhood education.

So the $9.6 billion in extra promises yesterday from the Coalition would seem on the surface to be another drawing down of the boom’s economic capital. But there are some actually useful moves within the big sums.

First, the childcare rebate has been a crazy disaster since it began. Apparently, a PhD in economics wasn’t enough to work out how to claim it. I called for a direct offset of fees and it looks like the Coalition will deliver on that. Labor had been edging towards it too but this was a clear statement.

Second, the idea of looking past the public/private distinction when subsidising education is a good one. Stephen King and I argued for precisely that in our 2004 book Finishing the Job, as private education offered a valuable role in saving public funds. That said, we also thought you could do this without giving the rich a break and more transparently than through the tax system; but this is the Coalition after all. If they won’t speak for the rich, who will?

Finally, the children’s savings account seems to be an interesting move especially given that we currently pay the top marginal rate on that stuff. But will it be a boon for the banks or will broader, Labor style, savings in managed funds be allowed?

It was a big price tag for those three micro reforms but for the Coalition thus far in this election, a silver lining has been hard to find.

Joshua Gans is an economics professor at the Melbourne Business School. He blogs on these issues at economics.com.au.