PRE-BUDGET

DEFICIT
TONY ABBOTT
AND THE COALITION
FOR THE INFORMATION OF HONOURABLE MEMBERS
MARCH 2012
JustlastweektheLeaderoftheOppositiondeclaredhewouldbeelectedAustraliasnextPrime
Minister.
ItsnowtimeforTonyAbbotttocomecleanonhisplansforthebudget.
ThisdocumentindicatesthatastheGovernmentisreturningthebudgettosurplusin201213,
the Liberals would plunge it in to defcit.
Ontheanalysisbelow,Oppositionpolicieswouldputthebudget$9billionintotheredin
201213.
Even though the Opposition would be in defcit in 2012-13, they are still touting a long shopping
listofmultibilliondollarpromisesonaweeklybasis.
TheOppositionsbudgetpositionwillgofrombadtoworsewhentheiraspirationalpromisesare
addedtotheirexistingcommitments.
InthelastfewdayswehavelearnedthatTonyAbbotts$70billionworthofcutswillbekepta
secretuntilaftertheelection.
MrAbbottneedstocomecleanwithvotersaboutwherethosecutsarecomingfrom.
And,whiletheLeaderoftheNationalsthemanwhowouldbecomeAustraliasDeputy
PrimeMinisterthinkstheirpolicydevelopmenthasneverbeenbetter,theirshadowFinance
spokesperson has said that all oI their policies are still yet to be fnalised.
IsitanywondertheCoalitioncannotsaywhentheywillreturnthebudgettosurplus,ordeliver
additionaltaxcuts,orruleoutcutstoservices?
At the last election they got it wrong by $10.6 billion and their costings frm was fned Ior
professionalmisconduct.
ItstimeforTonyAbbotttoreplacehubriswithhonestyandcomecleanwiththeAustralian
people.
INTRODUCTION
1
A $9 BILLION DEFICIT IN 2012-13
IntheyeartheGovernmentisreturningthebudgettosurplus,theOppositionspolicieswould
have a negative impact on the budget oI over $10 billion, with the budget $9 billion in defcit in
201213.
Figure1:ImpactonUnderlyingCashBalance(201213)
$4,000
$2,000
$0
$2,000
$4,000
$6,000
$8,000
$10,000
($m)
Government
Opposition
Table1:ImpactofOppositionPolicyCommitments
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e estimate assumes that all elements of the CEF package are repealed, but that the tax reform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
Departments 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.
RepealoftheMineralRentResourceTax(MRRT)andassociatedmeasures
The MRRT spreads the benefts oI the resources boom to all Australians. Repealing this
packagewouldmeanthat2.7millionsmallbusinesseswouldmissoutontaxbreaks,3.6million
4
lowincomeworkerswouldmissoutonthelowincomesuperannuationcontribution,and
regionalAustraliawouldmissoutonaregionalinfrastructurefund.
TheestimateassumesthatallelementsoftheMRRTpackagearerepealed,exceptthe
superannuationguaranteeincreasefrom9%to12%forwhichtheOppositionhavepreviously
indicatedsupport.
Adjusted Coalition 2010 Election Commitments
Having avoided scrutiny throughout the 2010 election campaign, the Coalitions 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
TheOppositionthemselveshaveadmittedtheyhavea$70billionblackhole.Itisclearthe
issues with the Opposition`s costings do not stop at the end oI the 2012-13 fnancial year.
Weneedtoidentifyupto$70billionoverthenextfouryears.
ANDREWROBBNEWSRADIO16AUGUST2011
ThereisarangeofspendingproposalsandliabilitiestheOppositionwillneedtofundbefore
theyevengettothestartline.
Thesepromiseswillpunchadeeperholeinthebudgetandtheyareincurredevenbeforetheir
aspirationalpoliciesareaccountedfor,noneofwhichhavebeenoffsetbytheCoalition.
A $70 BILLION BLACK HOLE
PersonalIncomeTaxCuts
TheOppositionhavecommittedtointroducebroadbasedpersonalincometaxcuts,buthavenot
providedanydetail.
Given that the Opposition has criticised the CEF tax cuts that are targeted to beneft low and
middleincomefamilies,itcouldbeassumedthattheywillfocustheirtaxcutsatthehigherend
oftheincomescale.
Forcontext,the200304taxcutshadacostofover$10billionoverfouryears.
AspirationalPoliciesProposedbytheOpposition:
TheOppositionhavealsoforeshadowedarangeofpoliciesunderdevelopmentthatthey
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
aspirationalcommitmentsandpromises.
ey will need to identify further savings to fund these measures.
AND THERES 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
Oneofourmostfundamentalcommitmentswastobringthebudgetbacktosurplusin
201213.
TONYABBOTTTHEAUSTRALIAN25AUGUST2010
Wewilldoitassoonaspossible.Youvegottobemeasuredonthis.
JOEHOCKEY7FEBRUARY2012
Wellitjustdepends.
ANDREWROBBABC246FEBRUARY2012
THE $70 BILLION
Weneedtoidentifyupto$70billionoverthenextfouryears.
ANDREWROBBNEWSRADIO16AUGUST2011
'It is a massive amount oI money. ThereIore fnding 50, 60 or 70 billion is about....
JOEHOCKEYSUNRISE12AUGUST2011
'No, it`s not a Iurphy. We came out with the fgure.
ANDREWROBBMEETTHEPRESS4SEPTEMBER2011
'We identifed $50 billion worth oI savings prior to the last election, a lot oI those are not
availablethistime.
WARRENTRUSSDOORSTOP9NOVEMBER2011
WHAT THEY SAY
7
TAX CUTS
...moretaxcutswillbeinprospect.
TONYABBOTTNPC31JANUARY2012
'We will aim Ior tax cuts in our frst term.
JULIEBISHOPSKY1FEBRUARY2012
Imnotgoingtogointothetimeframeofexactlywhentheyllbedelivered.
BARNABYJOYCEDOORSTOP31JANUARY2012
THE REAL AGENDA
'We haven`t fnalised any oI our major policies.
ANDREWROBBABCPM5MARCH2012
Ihaveneverknowninmytimetobesofaradvancedinpolicydevelopmentasweare.
WARRENTRUSSSKY28FEBRUARY2012
'Pensions, disability support, Iamily tax benefts and childcare support, among others,
createacycleofdependencyformillionsofAustralians.Thedeadhandofgovernmentwithits
CentrelinkchequebookencouragesmanyAustralianstobelievethattheresnootherwayoflife
thanputtingyourhandout.
JAMIEBRIGGSAFR7FEBRUARY2012
8
PRE-BUDGET
DEFICIT
TONY ABBOTT
AND THE COALITION
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