Labor says the quality of the commonwealth budget needs to improve dramatically and it is calling for expert help to ensure that it happens.
Jim Chalmers, the shadow finance minister, has released a discussion paper – Better Budgeting – that asks what improvements could be made to make the budget more transparent and less likely to fall prey to “some of the trickery that has characterised recent budgets”.
He said the federal budget ought to underpin the “right kind” of economic growth that is inclusive, and which mitigates inequality and promotes social mobility.
There may also be greater scope for the budget papers to provide information on the distributional impact of key policies, he said. This could include descriptions of the shifting impact of budget decisions on individuals and different cohorts over time.
“The budget papers allow governments to obscure important information that aids commentators and the public in understanding the impact of budget decisions, such as not including distributional information,” the paper says.
“With inequality at a 75-year high, policymakers need to pay more attention to the impact of policy changes on low- and middle-income households.”
Chalmers said some of the issues raised in his paper were technical and may not be front-of-mind for most Australians, “but they are important issues nonetheless, because they go to the best use of their taxpayer dollars”.
He also said he had deliberately avoided proposing specific ways to improve the budget because he would like the discussion to be led by leading academics, accountants and economists. But he does highlight the need to treat capital and recurrent spending differently.
“Many prominent economic institutions, including the OECD, the IMF and the Reserve Bank of Australia have put the case for developed economies like Australia to increase investment in public infrastructure to boost growth and productivity,” the paper says.
“Governments may be reluctant to fill any infrastructure gap because the budget presentation does not differentiate between infrastructure spending and recurrent expenditure.
“To make investments clearer, some commentators have suggested splitting out investments in capital formation and infrastructure from recurrent expenditure in budget reporting.
“By splitting out, for example, infrastructure investments, the government could also provide regular reporting on cash flows for specific projects.”
When the Turnbull government’s 2016-17 budget was published, modelling from the Australian National University found Australia’s poorest families would be hit hardest if all budget measures were implemented.
It found households in the lowest 20% of income earners would be $446 a year worse off, a loss of 1.5% of their disposable income, compared with the top 20% of households who would be $434 a year worse off, just 0.2% of their income.
The hardest hit by changes were single parents in the lowest 20% of income earners, who lost $1,407, or 3.6% of their income.
Chalmers has suggested that the budget would be more transparent if similar distributional modelling was included for key policies.
Submissions close at the end of March.
