Big and small spending included in Labor costings, but off-budget items yet to be revealed
- Written by Stephen Bartos, Professor of Economics, University of Canberra
The federal budget will be stronger[1] than suggested in last month’s budget, according to Treasurer Jim Chalmers who released Labor’s costings on Monday.
Many of the policies included in the costings were already detailed in either the 2025 Budget or the Pre-Election Fiscal Outlook, so are shown as having a net zero cost.
But that does not mean they are costless. It means simply that their costs were included in previously published budget updates.
Monday’s media announcement[2] is akin to the reconciliation table published in each update, prepared by the Treasury and Finance departments setting out how the numbers have changed.
It seems likely this media release drew on the same methodology.
It includes two savings measures. One is relatively small: $700 million from increasing the visa application charge for primary student visas. The big saving is $6.4 billion from further reducing spending on consultants, contractors, labour hire, and non-wage expenses such as travel, hospitality and property.
Travel, hospitality and property expenses are small bikkies. Undoubtedly departments could make savings on these, but they won’t get anywhere near the total. The bulk of the savings will come from reducing spending on consultants and contractors.
Labor has shown that such savings on consultants are possible; it did it in its first term. However, counterbalancing this, we saw increased spending on the public service.
It is the same problem as with the Coalition’s promise to make savings by cutting public servants. Without cuts to programs and activities, work remains to be done. People have to be employed to do that work, leading either to more spending on the public service (Labor) or bringing back consultants (Coalition).
There was no independent signoff suggesting Monday’s release included all of Labor’s policy announcements. We won’t get that until the Parliamentary Budget Office does its election commitments report.
But this full list of costings is not released by the PBO until well after the election. This is either 30 days from the end of the caretaker period or seven days before the new parliament first sits, whichever comes later.
However, Monday’s costings release does appear comprehensive, including not only the large headline announcements but several announcements of less than a million dollars a year.
What are missing, though, are costings of items that are off-budget because they are balance sheet adjustments – for example, the reduction in student HECS debt.
These do have a financial impact but due to their accounting treatment are not disclosed as hitting the budget balance. Ideally, these should be disclosed as well.
References
- ^ will be stronger (www.abc.net.au)
- ^ media announcement (alp.org.au)
Authors: Stephen Bartos, Professor of Economics, University of Canberra
