Labor’s fiscal plan: savings of $10.5b over the decade and real structural reform
Labor has again led the economic and fiscal debate today, releasing detailed policy and savings costings over both four and 10 years, demonstrating real economic management and a commitment to transparency.
Launching the costings details, shadow treasurer Chris Bowen and shadow finance minister Tony Burke said Labor has a positive plan for Australia’s future, and a clear plan to pay for it that is responsible and fair.
“Today Labor unveils our final Budget bottom line and a fiscal plan that confirms we will put the Budget on a path back to balance in the same year as the Liberals, without smashing family budgets or cutting funding from schools, hospitals and Medicare,” said Bowen.
“All of Labor’s policies are fully costed and funded through significant, structural Budget reforms.”
“The Australian economy is experiencing a fragile transition with households facing the slowest wages growth on record and the longest fall in living standards since records began in the 1970s — and cannot afford the massive cuts the Liberals are planning over the next four years.
“The election of a divided Liberal government — with the Turnbull faction fighting the extreme right — represents a clear economic risk for Australia.
“All of Labor’s policies are fully costed and funded through significant, structural budget reforms that build over time.
“This will see a net savings position of $10.5b over the decade,” Bowen added.
Labor today also announced further savings measures that brings Labor’s total Budget improvements to more than $130b over the medium term.
“As well as working closely with the independent Parliamentary Budget Office (PBO) over the last three years, Labor’s costings and final Budget position have been signed off on by an independent costings panel consisting of Professor Robert Officer AM, Dr Michael Keating AC and Mr James MacKenzie,” said Burke.
Under current forecasts Labor will:
- Reduce the deficit every year until the Budget returns to balance.
- Bring the Budget back to balance in 2020–21, the same year as the Liberals.
- Build strong surpluses over the medium term through fair savings measures that gradually and permanently improve the Budget bottom line.
“Every dollar of the modest difference between Labor and the Liberals over the forward estimates is a result of Labor’s decision to protect Medicare and deliver productivity-enhancing investments in schools, universities and infrastructure,” said the shadow minister.
“The Liberals have tripled the deficit, added $100b to net debt and smashed the household budgets.”
“The 50 per cent of the difference is because of Labor’s investments in our schools and universities.
“The Liberals have tripled the deficit, added $100b to net debt and smashed the household budgets of Australian families.
“Their deep and unfair cuts to the services Australians rely on will damage confidence, weaken growth and put the economy at risk,” Burke added.
During times of economic uncertainty, the last thing the Budget needs is a $50b tax giveaway for big business and the banks.
“Unlike the Liberals, Labor’s Budget bottom line does not include unlegislated measures that have no hope of passing the parliament,” said the shadow treasurer.
“The Liberals’ Budget position has no credibility — it relies on more than $30b of so-called “zombie” measures — measures introduced in Tony Abbott’s disaster 2014 Budget.
“Labor’s responsible and credible plan sees surpluses build beyond 2020–21.”
“When you remove these “zombie” measures from the Liberal Party’s bottom line, the forecast deficit would be 50 per cent higher at $9b in 2019–20, not the $6b presented in the Budget papers.
“The Liberal Party would barely be in surplus over the medium term.
“Labor’s responsible and credible plan sees surpluses build beyond 2020–21,” he added.
The fact is both sides of politics will be in deficit over the forward estimates, and the Liberals will deliverlarger deficits than outlined in the Pre-Election Economic and Fiscal Outlook.
The difference is that Labor is being upfront about the decisions we are making to responsibly repair the budget — without smashing family budgets or cutting essential services.
New measures for Budget repair
In addition to confirming our plan for Budget repair that is fair, Labor is today announcing a further $2b in Budget improvements over the medium term.
Capping tax deductions for managing tax affairs
From 1 July 2017, Labor will place a $5000 cap on the deduction individuals can claim for the cost of managing their tax affairs.
“We will put a stop to this kind of double dipping by private health insurers.”
“The average taxpayer claims just $366 as a deduction against the cost of hiring an accountant to help with their tax return,” said Burke.
“Only about 40,000 people — less than 0.5 per cent of all taxpayers — will be affected by the introduction of this cap.
“Importantly, the cap will not apply to small businesses with positive business income and annual turnover of less than $2m,” he added.
The PBO has costed this measure, and estimated it will save $295m over the forward estimates and $1.7b to 2026–27.
Removing the Private Health Insurance Rebate on “junk” policies
Labor will remove the private health insurance rebate from policies that only cover public hospital treatment.
“The rebate is supposed to help relieve pressure on the public health system,” said Bowen.
“These policies do not do that because families end up on public hospital waiting lists anyway.
“A Shorten Labor government will responsibly repair the Budget.”
“That means taxpayers are subsidising these policies through the rebate, while at the same time paying for the treatment people end up receiving through the public health system.
“We will put a stop to this kind of double dipping by private health insurers,” the shadow treasurer added.
The PBO has costed this measure, and estimated it will save $135m over the forward estimates and $384m to 2026–27.
“The Australian people have a clear choice this election,” said Burke.
“Malcolm Turnbull and the Liberals will cut schools and hospitals and destroy Medicare, while recklessly spending $50b on a tax break for big business and banks,” he added.
Bowen said the comparison was evident for vioters to see: Labor’s responsibility against the Liberals’ cuts.
“A Shorten Labor government will responsibly repair the Budget, invest in schools and hospitals, save Medicare and protect middle and working class families,” the shadow treasurer said.
This article originally appeared in the Labor Herald.
