After a difficult week for the opposition in which it admitted the budget deficit would be bigger over the next four years under a future Labor government, the ALP announced $6.1 billion over 10 years in new savings measures and a $10.1 billion, 10 year improvement to previously announced savings measures as a result of updated costings.
But the government seized on the late Friday afternoon announcement to respond that under Labor the budget bottom line would still be worse off over the next four years.
And the debate over costings descended into a tit-for-tat stoush over what could, and could not be, counted in the so-called “zombie” measures – that is, legislation proposed by government as far back as the 2014 budget that has been stuck in the Senate.
Treasury and Finance estimate the figure is about $18 billion, including 2016-17 budget measures, whereas the Parliamentary Budget Office estimates it is about $9 billion.
Announcing the measures on Friday, Opposition Leader Bill Shorten, shadow treasurer Chris Bowen and finance spokesman Tony Burke flagged more cuts and savings during the course of the election campaign as Labor looks to buttress its economic credentials against government attacks over a budget black hole.
“The approach [we] have taken for two years is to be completely up-front about our decisions, to announce them well in advance of this election and we’re continuing with that. We will have further announcements to make in relation to savings,” Mr Bowen said.
“We will continue to make these tough decisions. We will invest in schools, in infrastructure, in hospitals. We will protect the AAA rating.”
Overall, Labor on Friday claimed a net improvement to the budget bottom line of $8.9 billion over four years and $105.4 billion over 10 years as savings from structural changes to negative gearing and capital gains tax ramp up.
But Mr Morrison hit back, arguing it was difficult to “get any real sense of where the Labor Party stands on pretty much anything”.
“After all the singing and dancing from the Leader of the Opposition and the shadow treasurer and the shadow finance minister, they have announced a net improvement on their previous position of just $2.4 billion,” Mr Morrison said.
“They have gone from a cumulative figure of $16.3 billion in improvements to $16.9 billion in improvements, from the additional savings measures they have outlined today.”
Overall, Mr Morrison said Labor had only reduced the impact of the “zombie” measures on its budget bottom line from $18.15 billion to $16.36 billion. In addition, the government estimates Labor has already spent $16.1 billion during the campaign, meaning the claimed budget black hole is at least $32 billion.
The ALP’s decision to raise the white flag and admit it would now wave through four blocked Senate measures worth about $1 billion over four years and $6.4 billion over 10 years represented a significant backdown.
The four “zombie” measures Labor backflipped on include changes to research and development tax incentives and changes to HECS indexation arrangements.
The 11 new savings measure, cuts and other measures unveiled by the ALP included a plan to halve the family tax benefit part A end of year supplement, worth between $354 to $726 per child per year, that is paid to families earning more than $100,000.
This will save $505 million over four years and $2.1 billion over 10 years, while a pause in the threshold at which families lose a portion of their family benefits will save $275 million over four years and $800 million over a decade.
Labor argues these changes will affect 137,000 families, while the government’s plan to abolish the FTB-A and FTB-B supplements by 2018 to pay for its childcare package would hit about 1.9 million families.
Other big changes include ending the private health insurance rebate for natural therapies and maintaining the pause on the indexation of private health and Medicare Levy surcharges, saving about $3 billion over four years.
Funding for two key policy initiatives put in place by Foreign Minister Julie Bishop – ‘New Colombo plan’ scholarships for Australians to study in Asia and an “Innovation Xchange” within her department, were also massively scaled back, saving about $700 million over a decade.