Labor, Coalition promise billion-dollar surpluses in three years as pre-election costings revealed

Home Politics Labor, Coalition promise billion-dollar surpluses in three years as pre-election costings revealed
Labor, Coalition promise billion-dollar surpluses in three years as pre-election costings revealed

Both the Labor and Liberal parties are promising to deliver budget surpluses exceeding $1 billion by 2025-2026 if they win government, according to pre-election costings.

The figures were revealed as both major parties provided details of the costings behind their election promises as polling day looms.

The Labor costings were assessed by the Treasury while the Coalition’s have been assessed by the independent Parliamentary Budget Office.

Economists have criticised both sides of politics for failing to engage in any budget repair or attempt to create a sustainable budget, describing the costings as reliant on “optimistic assumptions and accounting tricks”.

Both parties have revealed that projected surpluses for 2025-2026 would be delivered in part by raiding contingency funds that already exist in the budget. The Coalition is also planning on taking $10 billion from the state’s future fund to pay down debt — saving the state $775 million in interest payments.

The contingency funds are designed to protect the budget from any future economic shocks, but Treasurer Tim Pallas said it was appropriate to use the funds.

“We put aside a contingency for future expected costs and we draw down on that contingency, which happens regularly and is part of the normal process of day to day government,” he said.

Mr Pallas said Labor was “on track” to reach a surplus of more than $1 billion by 2025-2026.

The government has pledged $8.4 billion worth of new projects — including more than $4 billion for health and new hospitals.

Costings for the Coalition show that it is able to spend $10.5 billion from shelving the Suburban Rail Loop.

Shadow Treasurer David Davis heavily criticised Labor’s costings while revealing his party’s projections, which would deliver a larger surplus by the next state election.

He said under the Coalition plan, the surplus by 2025-2026 would be $11.3 billion, with a smaller surplus achieved the year before.

Mr Davis said if elected, a Coalition government would “start the task of budget repair, and start the task of cutting debt” right away.

Its debt reduction will in part rely on taking billions out of the state’s future fund over the next four years, as well as by privatising the state’s sewerage services.

Lack of ‘genuine savings’ criticised

Danielle Wood, economist and CEO of public policy think tank the Grattan Institute, was disappointed by the offering from both parties.

“The costings confirm what we had already seen through this campaign,” she said.

“Both parties have announced significant programs of spending. There is very little in the way of genuine savings outlined in these documents, certainly no proposals around tax.

“So any budget repair we’re seeing is largely off the back of optimistic assumptions and accounting tricks.”

Danielle Wood Grattan Institute CEO. Photo by Peter Drought
Grattan Institute CEO Danielle Wood says the details of the costings were not a surprise.(ABC News: Peter Drought)

She said the way the parties had relied on contingency funding was not usual practice.

“We do see parties draw on contingencies in funding promises but I think the heavy reliance on that as the primary mechanism by which they are repairing the budget is unusual, and points to the fact that really they haven’t looked for genuine savings or opportunities to repair the budget elsewhere,” Ms Wood said.

She said Victorians should be concerned by the state’s “quite large” debt coming out of COVID.

“That is expected to increase over the next four years and neither side have come into this election with a genuine plan to bring that debt down,” Ms Wood said.

“In fact, quite the opposite, we’re seeing very large spending commitments on both sides.”

Labor says no debt increase or new taxes

Mr Pallas said Labor was making more than a billion dollars in savings by cutting the use of consultants and labour hire firms as well as winding back some programs that were being superseded by Commonwealth programs.

Figures released by the Department of Treasury and Finance in late October predicted a more modest figure, with a surplus of almost $900 million by 2025-2026. In the state budget handed down in May, that figure was $650 million.

Leave a Reply

Your email address will not be published.