Labor to unveil billions in new savings

Opposition Leader Bill Shorten and shadow treasurer Chris Bowen addresse the media during a joint doorstop in Brisbane on Wednesday. Photo: Alex Ellinghausen Opposition Leader Bill Shorten visits sandbagged properties in Forth, during his visit to Tasmania to tour flood affected regions. Photo: Alex Ellinghausen

Federal election 2016: Video, news and analysisYourVote: Are you voting for the right party?Comment: Labor faces reality, not a moment too soon

Labor will announce billions in new savings measures over 10 years on Friday, including changes to family payments that could anger sections of the ALP base.

The opposition will also finally deal with the so-called “zombie measures” – unlegislated policies stuck in the Senate dating back to the 2014 budget worth as much as $18 billion – in a move designed to fend off the government’s political attack over its budget “black hole”.

In addition to finding savings by better targeting family payments, Labor is expected to announce it will now back changes to a Research Tax Incentive announced in the 2014-15 budget that will save about $1 billion over four years.

The opposition was tight-lipped on Thursday night but it is expected to back down and wave through a number of other measures it has fought for nearly three years – as it has already done in the campaign on the abolition of the School Kids bonus and the tighter pension assets test – in its search for savings.

The decision to announce new savings comes after Bill Shorten and Chris Bowen confirmed on Wednesday that deficits would be larger for four years if Labor wins the election, though it would still aim to return the budget to balance in 2020-21, the same year as the Coalition.

That admission prompted three of Australia’s most respected budget economists to warn that those deeper deficits could threaten Australia’s AAA credit rating.

A party spokesman said: “There are several Abbott-Hockey budget measures that have are stuck in the Parliament. Despite not passing the Parliament, they remain in the budget. On Friday Labor will confirm its position on these ‘zombie measures’.

“We will resolve not to oppose some measures, and confirm our continued opposition to others. The ones we commit to reverse will be removed from our bottom line. This will mean the government’s budget contains unlegislated zombie measures, but ours will not.”

“We will announce some new measures that better target family payments, while protecting those who need support the most. Families will still be better off under Labor.”

The Coalition has claimed Labor has a $67 billion ‘black hole’ in its costings but the figure is likely nearer to $22 billion, including the zombie measures.

The promise of new savings came as the Parliamentary Budget Office released an updated estimate on Thursday evening that found the so-called “zombie” measures amounted to $9.2 billion over the next four years and $31.3 billion over the decade, a reduction from about $15 billion over four years and $44 billion over 10 years.

Treasury and Finance have estimated the figure at $18 billion over four years.

Friday’s announcement will not be the end of Labor’s savings promises but will form a significant portion for the campaign.

It is designed to underscore Labor’s commitment to schools, hospitals, Medicare and to budget repair.

On Thursday, Mr Bowen defended the plan to run bigger deficits in the short term and argued that over a decade, Labor’s structural savings would leave the budget better off.

“Whoever receives the Treasurer’s incoming brief on July 3, whether it is me or Scott Morrison, the information will be the same, action is needed to restore the budget to balance, to save the AAA,” he said.

“Because our measures build over time, we will actually have stronger surpluses going forward.”

Treasurer Mr Morrison hammered Labor over the admission it would run bigger deficits in the short term.

“We are actually reducing expenditure as a share of the economy from 25.8 per cent to 25.2 per cent. Labor is going to increase expenditure . . . their deficits, as a result, will be higher,” he said in Perth.

“Every single tax Labor’s going to raise, and it’s over $100 billion of additional taxes over the next 10 years, $14 billion over the next four years, not one cent of that tax is going to reduce the deficit.”

Labor has claimed, to date, about $100 billion in savings and new revenue or tax measures before the May 3 budget and about another $70 billion since then – a figure the Coalition broadly agrees with.

But the Coalition believes Labor is relying on a parliamentary budget office estimate that hiking tobacco excise will raise about $47 billion in revenue – even though Treasury has estimated it will raise about $27 billion – and that the opposition is double-counting the revenue, which is now factored in to the budget because it has been adopted by the government.

The government also estimates that Labor has already spent close to $20 billion in new spending over four years –  and $70 billion over 10 – and that this is largely unfunded.

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