LABOR’S FISCAL PLAN TO DELIVER SAVINGS OF $10.5 BILLION OVER THE DECADE

Joint Media Release with the Shadow Treasurer, Chris Bowen.

Labor has a positive plan for Australia’s future, and a clear plan to pay for it that is responsible and fair.

Today Labor unveils our final budget bottom line and a fiscal plan that confirms we will put the budget on a path back to balance in the same year as the Liberals, without smashing family budgets or cutting funding from schools, hospitals and Medicare.

The Australian economy is experiencing a fragile transition with households facing the slowest wages growth on record and the longest fall in living standards since records began in the 1970s – and cannot afford the massive cuts the Liberals are planning over the next four years.

The election of a divided Liberal Government – with the Turnbull faction fighting the extreme right – represents a clear economic risk for Australia.

All of Labor’s policies are fully costed and funded through significant, structural budget reforms that build over time. This will see a net savings position of $10.5 billion over the decade.

The further savings measures Labor announces today brings Labor’s total budget improvements to more than $130 billion over the medium term.

As well as working closely with the independent Parliamentary Budget Office over the last three years, Labor’s costings and final budget position have been signed off on by an independent Costings Panel consisting of Professor Robert Officer AM, Dr Michael Keating AC and Mr James MacKenzie.

Under current forecasts Labor will:

  • Reduce the deficit every year until the budget returns to balance.
  • Bring the budget back to balance in 2020-21, the same year as the Liberals.
  • Build strong surpluses over the medium term through fair savings measures that gradually and permanently improve the budget bottom line.

Every dollar of the modest difference between Labor and the Liberals over the forward estimates is a result of Labor’s decision to protect Medicare and deliver productivity-enhancing investments in schools, universities and infrastructure.

50 per cent of the difference is because of Labor’s investments in our schools and universities.

The Liberals have tripled the deficit, added $100 billion to net debt and smashed the household budgets of Australian families. 

Their deep and unfair cuts to the services Australians rely on will damage confidence, weaken growth and put the economy at risk.  

In times of economic uncertainty, the last thing the budget needs is a $50 billion tax giveaway for big business and the banks.

Unlike the Liberals, Labor’s budget bottom line does not include unlegislated measures that have no hope of passing the Parliament. The Liberals’ budget position has no credibility – it relies on more than $30 billion of so-called “zombie” measures – measures introduced in Tony Abbott’s disaster 2014 Budget.

When you remove these “zombie” measures from the Liberal Party’s bottom line, the forecast deficit would be 50 per cent higher at $9 billion in 2019-20 (not the $6 billion presented in the budget papers), and the Liberal Party would barely be in surplus over the medium term. Labor’s responsible and credible plan sees surpluses build beyond 2020-21.

The fact is both sides of politics will be in deficit over the forward estimates, and the Liberals will deliver larger deficits than outlined in the Pre-Election Economic and Fiscal Outlook.

The difference is that Labor is being upfront about the decisions we are making to responsibly repair the budget – without smashing family budgets or cutting essential services.

NEW MEASURES FOR BUDGET REPAIR

In addition to confirming our plan for budget repair that is fair, Labor is today announcing a further $2 billion in budget improvements over the medium term.

Capping tax deductions for managing tax affairs

From 1 July 2017, Labor will place a $5,000 cap on the deduction individuals can claim for the cost of managing their tax affairs.

The average taxpayer claims just $366 as a deduction against the cost of hiring an accountant to help with their tax return. Only about 40,000 people – less than 0.5 per cent of all taxpayers – will be affected by the introduction of this cap.

Importantly, the cap will not apply to small businesses with positive business income and annual turnover of less than $2 million.

The independent Parliamentary Budget Office has costed this measure, and estimated it will save $295 million over the forward estimates and $1.7 billion to 2026-27.

Removing the Private Health Insurance Rebate on “junk” policies

Labor will remove the Private Health Insurance Rebate from policies that only cover public hospital treatment.

The rebate is supposed to help relieve pressure on the public health system. These policies do not do that because families end up on public hospital waiting lists anyway.

That means taxpayers are subsidising these policies through the rebate, while at the same time paying for the treatment people end up receiving through the public health system. We will put a stop to this kind of double dipping by private health insurers.  

The independent Parliamentary Budget Office has costed this measure, and estimated it will save $135.1 million over the forward estimates and $384 million to 2026-27.

The Australian people have a clear choice this election.

Malcolm Turnbull and the Liberals will cut schools and hospitals and destroy Medicare, while recklessly spending $50 billion on a tax break for big business and banks.

A Shorten Labor Government will responsibly repair the budget, invest in schools and hospitals, save Medicare and protect middle and working class families.

For more information on Labor’s fiscal plan please visit http://www.100positivepolicies.org.au/laborsfiscalplan