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Federal Government's costings of Opposition policies

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PRE-BUDGET
DEFICIT
TONY ABBOTT
AND THE COALITION
FOR THE INFORMATION OF HONOURABLE MEMBERS
MARCH 2012
Just last week the Leader of the Opposition declared he would be elected Australia’s next Prime 
Minister.
It’s now time for Tony Abbott to come clean on his plans for the budget.
This document indicates that as the Government is returning the budget to surplus in 2012­13, 
the Liberals would plunge it in to defcit.
On the analysis below, Opposition policies would put the budget $9 billion into the red in   
2012­13.
Even though the Opposition would be in defcit in 2012-13, they are still touting a long shopping
list of multibillion dollar promises on a weekly basis.
The Opposition’s budget position will go from bad to worse when their aspirational promises are 
added to their existing commitments.
In the last few days we have learned that Tony Abbott’s $70 billion worth of cuts will be kept a 
secret until after the election.
Mr Abbott needs to come clean with voters about where those cuts are coming from.
And, while the Leader of the Nationals – the man who would become Australia’s Deputy 
Prime Minister – thinks their policy development has never been better, their shadow Finance    
spokesperson has said that all oI their policies are still yet to be fnalised.
Is it any wonder the Coalition cannot say when they will return the budget to surplus, or deliver 
additional tax cuts, or rule out cuts to services?
At the last election they got it wrong by $10.6 billion and their costings frm was fned Ior
professional misconduct.
It’s time for Tony Abbott to replace hubris with honesty and come clean with the Australian 
people. 
INTRODUCTION
1
A $9 BILLION DEFICIT IN 2012-13
In the year the Government is returning the budget to surplus, the Opposition’s policies would 
have a negative impact on the budget oI over $10 billion, with the budget $9 billion in defcit in
2012­13.
Figure 1: Impact on Underlying Cash Balance (2012­13)
$4,000
$2,000
$0
­$2,000
­$4,000
­$6,000
­$8,000
­$10,000
    ($m)
Government
Opposition
Table 1: Impact of Opposition Policy Commitments
2
ASSUMPTIONS
Repeal of the Clean Energy Future (CEF) Package
e estimate assumes that all elements of the CEF package are repealed, but that the tax reform
elements and pension increases are retained.
Trebling the tax-free threshold means millions of Australians will no longer have to le tax
returns. e CEF reforms also signicantly simplify the tax system. It is therefore assumed that
the Opposition would not return the tax-free threshold to its pre-CEF rate.
e Government is delivering increased payments to pensioners as part of the CEF package. It is
assumed that these payments will be retained by the Opposition and that they will not cut pen-
sions.
Reinstating 30% Private Health Insurance (PHI) Rebate
e Opposition have committed to unwind the means testing of the private health insurance
rebate.
Mental Health Package
Tony Abbott announced a $430 million mental health package on 21 April 2011. e estimate
assumes that the funding is evenly spread over four years.
See: http://www.tonyabbott.com.au/
Life Saving Australia
e Opposition Leader committed to funding for life saving clubs on Australia Day 2012.
See: http://www.tonyabbott.com.au/
Nauru Immigration Policy
e Department of Immigration and Citizenship has released costs for the Nauru policy on the
Department’s website.
e estimate assumes that the capital costs for establishment are spent in the rst year, with the
operating costs evenly spread over four years.
3
Chronic Dental Disease Scheme (CDDS)
e Opposition continue to block the Government closing the CDDS, conrming their support
for the existing scheme.
Repeal of the Mineral Rent Resource Tax (MRRT) and associated measures
The MRRT spreads the benefts oI the resources boom to all Australians. Repealing this
package would mean that 2.7 million small businesses would miss out on tax breaks, 3.6 million
4
low income workers would miss out on the low income superannuation contribution, and          
regional Australia would miss out on a regional infrastructure fund.
The estimate assumes that all elements of the MRRT package are repealed, except the              
superannuation guarantee increase from 9% to 12% for which the Opposition have previously       
indicated support.
Adjusted Coalition 2010 Election Commitments
Having avoided scrutiny throughout the 2010 election campaign, the Coalition’s election
costings were nally submitted to the Treasury and Department of Finance and Deregulation
aer election day.
e completed costing found a $10.6 billion black hole of errors across the forward estimates.
And the rm hired to ‘audit’ their costings was ned for professional miscounduct.
e adjusted estimates account for these errors, and remove a number of savings that are no
longer available to oset Coalition spending commitments, for example:
t e Green Car Innovation Fund has been closed
t e Renewable Energy Future Fund has been exhausted
The Opposition themselves have admitted they have a $70 billion black hole. It is clear the       
issues with the Opposition`s costings do not stop at the end oI the 2012-13 fnancial year.
“We need to identify up to $70 billion over the next four years.”
ANDREW ROBB – NEWSRADIO – 16 AUGUST 2011
There is a range of spending proposals and liabilities the Opposition will need to fund before 
they even get to the start line.
These promises will punch a deeper hole in the budget – and they are incurred even before their     
“aspirational” policies are accounted for, none of which have been offset by the Coalition.
A $70 BILLION BLACK HOLE
Personal Income Tax Cuts
The Opposition have committed to introduce broad­based personal income tax cuts, but have not 
provided any detail.
Given that the Opposition has criticised the CEF tax cuts that are targeted to beneft low and
middle income families, it could be assumed that they will focus their tax cuts at the higher end 
of the income scale.
For context, the 2003­04 tax cuts had a cost of over $10 billion over four years.
Aspirational Policies Proposed by the Opposition:
The Opposition have also foreshadowed a range of policies under development that they        
regularly tout but have not bothered to cost, nor have they identifed how they will Iund them.
Even iI the Coalition were able to fll in their $70 billion blackhole, they still need to Iund their
aspirational commitments and promises.
ey will need to identify further savings to fund these measures.
AND THERE’S MORE
5
In total, these spending proposals run into the tens of billions of dollars, including:
t A national dental scheme as part of Medicare
t Proceeding with a national disability insurance scheme
t Unspecied additional welfare to work programs
t A bigger naval presence in Northern Australia and in the Southern Ocean
t Extending the solar hot water rebate
t Big spending on road infrastructure within Sydney
t Another failed broadband plan to roll back the NBN
t Any additional costs associated with rolling back the carbon price, including any
compensation arrangements to industry
t A possible second additional round of income tax cuts
e Nationals Policy Platform:
In December 2011, e Nationals set out the policy agenda they intend to take to the next
election. Out of 180 policies the Opposition committed to, amongst other measures, a $2 billion
regional telecommunications fund, an un-costed increase to the private health insurance rebate
for seniors to 40 per cent and removing indexation for HECS.
In addition, e Nationals also committed the Opposition to:
t Doubling the baby bonus
t Funding to redevelop a range of rail networks, including upgrading the Sydney to Brisbane
coastal rail link and the inland rail network from Brisbane to Melbourne
t Building a range of new country dams
t Expanding zonal tax allowances
t Tax deductibility of water infrastructure
t Paying for carer superannuation
t A 30 per cent investment allowance for regional businesses
Further information is available at http://nationals.org.au/Policy.aspx.
Additional Spending from Direct Action:
If the Opposition remains committed to delivering a 5 per cent reduction in our carbon
emissions, then Treasury has estimated that the costs of sourcing carbon emissions through
direct action and restricting the use of international permits could see an eective carbon price
of around $62 per tonne by 2020.
at would represent a total cost of around $48 billion to the budget. Currently, the Opposition
have not identied osets for this spending that would be required to meet the bipartisan 5 per
cent target.
If applied to households via the tax system, this would mean a $1300 increase in tax per
household each year.
6
RETURN TO SURPLUS
“One of our most fundamental commitments was to bring the budget back to surplus in       
2012­13.”
TONY ABBOTT – THE AUSTRALIAN – 25 AUGUST 2010
“We will do it as soon as possible. You’ve got to be measured on this.” 
JOE HOCKEY – 7 FEBRUARY 2012
“Well it just depends.”
ANDREW ROBB – ABC24 – 6 FEBRUARY 2012
THE $70 BILLION
“We need to identify up to $70 billion over the next four years.”
ANDREW ROBB – NEWSRADIO – 16 AUGUST 2011
'It is a massive amount oI money. ThereIore fnding 50, 60 or 70 billion is about....¨
JOE HOCKEY – SUNRISE – 12 AUGUST 2011
'No, it`s not a Iurphy. We came out with the fgure.¨
ANDREW ROBB – MEET THE PRESS – 4 SEPTEMBER 2011
'We identifed $50 billion worth oI savings prior to the last election, a lot oI those are not
available this time.”
WARREN TRUSS – DOORSTOP – 9 NOVEMBER 2011
WHAT THEY SAY
7
TAX CUTS
“...more tax cuts will be in prospect.”
TONY ABBOTT – NPC – 31 JANUARY 2012
'We will aim Ior tax cuts in our frst term.¨
JULIE BISHOP – SKY – 1 FEBRUARY 2012
“I’m not going to go into the time frame of exactly when they’ll be delivered.”
BARNABY JOYCE – DOORSTOP – 31 JANUARY 2012
THE REAL AGENDA
'We haven`t fnalised any oI our major policies.¨
ANDREW ROBB – ABC PM – 5 MARCH 2012
“I have never known in my time to be so far advanced in policy development as we are.”
WARREN TRUSS – SKY – 28 FEBRUARY 2012
'Pensions, disability support, Iamily tax benefts and childcare support, among others,
create a cycle of dependency for millions of Australians. The dead hand of government with its         
Centrelink chequebook encourages many Australians to believe that there’s no other way of life 
than putting your hand out.”
JAMIE BRIGGS – AFR – 7 FEBRUARY 2012
8
PRE-BUDGET
DEFICIT
TONY ABBOTT
AND THE COALITION
Authorised G. Wright, 5/9 Sydney Avenue, Barton, ACT 2600
Printed by BlueStar, 90 Sheppard Street, Hume, ACT 2620

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