Since its election in 2013, the Coalition has given away $46 billion in political decisions, and signed the Commonwealth up to $50-60 billion in long-term spending that will hammer the federal budget for decades to come.
The 2013 Pre-Election Fiscal Outlook, produced independently by Treasury and Finance, forecast a return to surplus this financial year and net debt peaking last year at $219 billion. The Coalition’s first budget forecast a return to surplus in 2018-19 and net debt peaking at $264 billion. In MYEFO at the end of 2016, however, the budget was forecast to be still in $10 billion deficit in 2019-20, when net debt would be $364 billion.
And while much of the dramatic deterioration of the budget under the Coalition is due to constant revenue writedowns (in spite of the government insisting it had “drawn a line in the sand” under any further writedowns), the government has dramatically worsened its own position through a series of political and ideological decisions that give the lie to its claims to be the victim of an irresponsible Senate:
- an $8.8 billion gift to the Reserve Bank to make the 2013-14 budget deficit look worse and earn future dividends for the government
- Repeal of the carbon price cost the Commonwealth around $12.5 billion in lost revenue over forward estimates and at least $1.8 billion per annum beyond that (based on a conservative estimate by the Climate Institute, lower than the government’s own estimate)
- The government’s company tax cuts agreed last week will cost $5.2 billion over forward estimates
- Repeal of the mining tax — despite the government’s claims that it raised no money — cost it $3.5 billion over forward estimates, according to budget papers.
- The reversal of Labor’s changes to Fringe Benefits Tax reporting requirements to end the rorting of novated leases cost, by its own admission, $1.8 billion over forward estimates
- Income tax cuts for middle- and high-income earners cost $3.8 billion
- The ineffective Emissions Reduction Fund, is costing $2.55 billion, although the government has decided no further funding will be wasted on it
- A Northern Australia Infrastructure Fund, established with no effective oversight, assessment or evaluation mechanisms and flagged as a funding source for unviable coal mining projects, will cost $5 billion.
- A National Water Infrastructure Development Fund established as a funding source for Barnaby Joyce’s obsession with building more dams, is costing $0.5 billion.
- A scheme to prop up dairy farmers threatening to desert the National Party, via the discredited means of concessional loans, is costing $0.55 billion.
- Australia’s continuing participation in Middle East military ventures has so far cost $0.72 billion since Tony Abbott sent Australian forces back to Iraq in the name of fighting the “existential threat” of ISIS.
- The government is spending $0.24 billion on a school chaplains program, although further funding has been halted for now.
- Nick Xenophon extracted an additional $0.37 billion worth of conditions as price for his support for company tax cuts last week.
However, there are significant costs beyond forward estimates from a number of other government measures.
- The disastrous F-35 joint strike fighter program will cost taxpayers at least $17 billion over the period to 2023, as new information emerges about problems with the aircraft that are not being addressed or are worsening, and with no guarantees the cost will not escalate further.
- The government’s decision to reverse the Abbott government’s approach and construct the new generation of Royal Australian Navy submarines in Australia is expected to add up to 30% to the $50 billion cost of the program in order to provide less than 3000 jobs in South Australia.
- The company tax cuts agreed last week will cost $25 billion over ten years, although the government remains hopeful it can increase that cost to $50 billion. There remains no evidence from anywhere in the world of any economic benefit from company tax cuts.
- The continuing fiscal impact of some of the above measures beyond forward estimates will cost the budget, on a conservative estimate, $6 billion per annum (unindexed).
Some of the decisions were backed by Labor — the submarines decision, which will cost the taxpayers of the future many billions of dollars, the F-35 purchase, and income tax cuts. But the theme of all of these decisions is that they are in defiance of evidence, represent the triumph of ideology over reason and in many cases were rankly political. Worse, some of them are likely to generate new waves of spending: the removal of an effective, cheap carbon price in 2014 created an energy policy vacuum that led directly to the current energy crisis and proposals from the government to spend billions of dollars re-entering the power generation industry. Our military involvement in the Middle East looks set to increase, not decrease, in coming years. The cost of poor decision-making will be borne by taxpayers for years, even decades, to come.