Labor’s policy measures would increase the deficit over the next four years by $16.5bn, leaving a total deficit of $101bn compared with the Coalition’s $84.5bn, but both Labor and the Coalition would return to surplus by 2020-21.
The shadow treasurer, Chris Bowen, said Labor’s policy measures on negative gearing and superannuation would pay dividends in the longer term, building to higher surpluses than the Coalition after the next four years.
By 2025-26, Labor claims it would have a surplus of $15.5bn compared with the Coalition’s $6bn and would achieve $10.5bn more in budget improvements than the government over the decade.
Bowen said if the so-called “zombie” cuts from Tony Abbott’s 2014 budget were removed, the Coalition’s deficit increases by 50% in 2019-20, from $6bn to $9bn.
“What we’ve seen here in the impact of our decisions is the impact on the budget,” Bowen said. “But Labor is concerned for the long term as well. And so, when you look at the impact of our decisions, we see the budget balance improving, the government sees it getting worse.
“Now, there’s a reason why the government won’t share with you their 10-year figures, because they don’t add up.”
Labor’s 10-year costings were signed off by an independent panel, including the former chairman of the National Commission of Audit and emeritus professor of finance Robert Officer, the head of the department of prime minister and cabinet under Paul Keating, Michael Keating, and a former chief executive of Norwich Union Australia, James MacKenzie.
Michael Keating underlined the point the panel was there to verify the costings, rather than endorse the policies.
“Costings of any policies inevitably involve a degree of uncertainty,” Keating said. “We’ve satisfied ourselves, having gone through the independent costings of the parliamentary budget office, that the uncertainty in the estimates put before you are no different to the uncertainty in budget measures and documents generally.”
Keating’s panel was also asked to look over Labor’s business plan for the national broadband network, which promises to connect an extra 2m premises with fibre to the home.
“I was a sceptic before I read the plan,,” Keating said. “Having had the opportunity to read the plan, I’m no longer a sceptic – I think it’s a high standard business plan.”
The documents were released immediately after the Liberal party launch on Sunday afternoon, six days before the election. Abbott’s opposition released its costings two days before the 2013 election.
Bowen also announced new cuts worth $2bn to improve its budget position in the final savings measures before the election.
The measures include a $5,000 cap on the deductions individuals can claim for the cost of managing their tax affairs.
Bowen said the average taxpayer claims just $366 as a deduction against the cost of hiring an accountant. But with 40,000 people (less than 0.5% of taxpayers) claiming more than $5000, the PBO estimated the measure would save $295m over the forward estimates and $1.7bn to 2026-27.
The cap would not apply to small businesses with positive business income and annual turnover of less than $2m.
Labor would also remove the private health insurance rebate for policies that only cover public hospital treatment, which Bowen described as “junk” policies.
“Both Choice and the Australian Medical Association have called for government action to either ban or abolish the private health insurance rebate on so-called ‘junk policies’,” Bowen said.
“These are policies in which the beneficiary receives, the policy holder receives no benefit. It simply ensures people for public hospital access they already get as citizens but enables the Medicare surcharge to be avoided.”
The health insurance measure is estimated by the PBO to save $135.1m over the forward estimates and $384m to 2026-27.
The treasurer, Scott Morrison, attacked the plans as “same old Labor” and rejected projections that have Labor increasing its surpluses beyond the government’s in the longer term.
“Labor’s prescription in these very uncertain and highly volatile times is a high deficit, higher debt and higher taxes,” Morrison said.
“That is what they have confirmed in their own documents today. And this is something that will weaken our economy, at a time when we need to be doing everything, particularly right now, to strengthen our economy.
“It will make us more vulnerable at a time of uncertainty and volatility, at a time we need to make it stronger. Labor can project into the future all they like but what matter assist what happens now.”
Bowen confirmed the new measures, including the $5000 cap on accountancy deductions and the tightening of the private health insurance rebate, would be the final savings measures before the election on July 2.
