Christopher Sheil has an interesting post in which he proposes abolishing the National Competition Council and using the $0.75 billion paid annually to the states and territories (as incentives to continue implementing Competition Guidelines) to fund national infrastructure. Roads, hospitals and schools are the infrastructure areas Chris has in mind, and he reckons Latham could announce a fully-funded $5 billion program over 5 years by this means.
It’s an idea worth considering, both in immediate political terms and as good policy per se. It certainly helps answer the “where’s the money coming from?” question that Peter Costello clearly has ready as soon as Labor announces its tax policy (if Latham ever gets around to it). On the other hand, $0.75 billion per year for 5 years didn’t add up to $5 billion when I went to school. It must be po-mo mathematics.
And even $5 billion over 5 years isn’t very much when it comes to funding infrastructure. It’s certainly better than a poke in the eye with a blunt stick, but if Labor really aims to reinvigorate national road infrastructure and make a significant impact on improving hospitals, schools and universities, a lot more will be needed.
And what about rail infrastructure, and the creation of a national electricity and gas grid, and tackling Sydney’s dwindling water supply by building new dams, and creating large-scale sustainable power generation facilities (whether by CO2 sequestration of coal, or other fuels)? Building the infrastructure necessary to create a truly national electricity and gas grid would actually be a far more useful way to create a truly competitive national market in those areas than persisting with the current National Competition Policy framework (which has largely failed in both gas and electricity for a range of reasons including infrastructure deficiencies).
But all this is going to take a lot more money than a measly $5 billion per year (which is actually just under $4 billion on my admittedly dodgy maths skills). If we’re in the land of dreaming up policy options, what about promising to index income tax thresholds at their current levels in real terms, and then using the $8 billion of “waste” savings Latham has supposedly identified to help fund infrastructure (and re-invigorate hospitals and tertiary education etc) instead of a miniscule tax cut? I reckon most people would be much more attracted by knowing that if they vote Labor bracket creep isn’t going to keep robbing them by stealth, than by getting a measly tax cut that everyone knows from past experience will soon disappear with bracket creep anyway.
Of course, the loss of all that painless bracket creep revenue would make a substantial hole in the alleged $8 billion in savings, but even an additional net two or three billion begins to make the whole idea look like a serious major initiative and not just an election gimmick. And Latham could announce a reprioritization commitment of future tax revenues from economic growth (from excises, CGT and so on) to be directed towards, health, education and productive infrastructure as well.