Costello Picks Holes In Labor Figures

by Philip Morton, Investors Offshore.com

26 November 2007

Speaking ahead of the weekend election which ousted his party from government, former Treasurer, Peter Costello argued that Treasury costings showed that a proposed tax cut aimed at foreign investors would override Labor's budget by millions of dollars.

Last May, Labor made proposals to halve (to 15%) the withholding tax rate on distributions to non-residents from Australian managed funds. In doing so, they predicted a cost of $105 million dollars over a three year period.

However, Costello suggested that this would, according to Treasury figures, be more likely to cost in the region of $500 million dollars.

The now-displaced Treasurer argued that the blunder was caused by the use of old data to calculate figures, in combination with a failure to allow for economic and financial growth within the country.

Then Labor treasury spokesman (and now Treasurer), Wayne Swan, spoke out on the issue last week, announcing, according to the AAP, that:

"Treasury's costing of Labor's policies show in aggregate Labor can bank an extra $500 million towards the budget bottom line because of its overall conservative costing approach. Mr Costello's claims are desperate and baseless, designed to hide the fact that yesterday he made a $1.1 billion accounting error on the coalition's budget bottom line."

Observer have suggested that the healthy budget balance that he has inherited is likely to give Mr Swan, who has pledged to get his "sleeves rolled up" and get straight to work on implementing Labor policy, a head start.

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