A political bunfight has erupted over both parties’ Budget revenue estimates.
The Coalition has accused Labor of drastically overestimating the revenue gained from raising cigarette taxes after the Australian Treasury estimated that it would raise $28.2 billion over the decade versus $47.7 billion claimed by Labor, a difference of $19.5 billion.
Labor has countered, however, that its estimates have come from the independent Parliamentary Budget Office (PBO), hence they are good.
From The Australian:
In a dramatic upset on the eve of the federal election, the Treasury estimates forced Labor’s spokesman Chris Bowen to explain his election costings just as he sought to go on the attack against the government over the fairness of its budget reforms…
The government will also match Labor’s policy to lift tobacco excise in four annual 12.5 per cent increases that start in September next year — taking the overall tax to three-quarters of the cost of each pack of cigarettes.
Labor unveiled its policy last year with the claim it would raise $3.8bn over the years to June 2019 and $47.7bn over the first decade, relying on confidential costings by the Parliamentary Budget Office that were never publicly released.
“When providing its costings, the PBO considered behavioural changes that are likely to result from the change in policy,” the Labor policy states.
Treasury modelling of the same excise increase showed it would raise only $2.2bn in the years to June 2019, suggesting Labor faces a $1.6bn hole in the funding of its promises over the four years of the official budget estimates.
The funding gap swells to $19.5bn over a decade.
However, the Coalition could also be accused of ‘cooking the books’, with Fairfax’s Peter Martin noting today that that there are $13 billion of so-called “zombie measures” left on the books from the first and second Abbott Government Budgets that will help prop-up tonight’s Federal Budget. From The SMH:
A parliamentary budget office count for the coming financial year puts the “ghost” measures at $1.7 billion. The biggest are the $600 million from planned cuts to access to Family Tax Benefits, $258 million from the outlawing of alleged double-dipping of maternity leave schemes, and $139 million from increasing co-payments and changing the safety net for the Pharmaceutical Benefits Scheme.
By 2019-20 the Family Tax Benefit cutbacks are booked to have saved the budget $6.3 billion, with the outlawing of double-dipping saving $1.3 billion, and changes to the Pharmaceutical Benefits Scheme $1.2 billion.
In total, the 25 unlegislated measures are on the budget books as saving $13.3 billion over the four years to 2019-20, even though none will be able to start as scheduled on July 1…
The practice of keeping half-dead measures alive in the budget estimates means that unless the measures get through Parliament, the next four budget deficits will be an average of $3.3 billion worse than projected.
