Tuesday, 2 August 2022
Pre-election Economic and Fiscal Outlook
Thank you, Acting Deputy President Dean Smith. I'm delighted to give this adjournment speech in your presence. Perhaps you're somewhat of a captive audience—or a captured audience. I'm not sure which is the right adjective, but I'm delighted to be able to give this speech in your presence.
I'd like to pay my respects to the team at the Parliamentary Budget Office. I think that they do an outstanding job, and at no time is their job more important than at the time of the federal election. They provide that service in a number of ways. They provide individual senators with costing supports. When individual senators have a proposal, the Parliamentary Budget Office will assist them in working out what the budgetary consequences of that proposal are. They assist parties in preparing their costings. And, more importantly—perhaps most importantly—they provide a service that I think all Australians should take advantage of: determining and judging the impact of different parties' policies, in terms of budgetary outcomes. So I was very interested to read the 2022 Election commitments report—July 2022, issued by the Parliamentary Budget Office. Something very stark emerged from this report. I'll read from the key points in the summary:
The Coalition's platform, if fully implemented, would be expected to result in slightly smaller deficits over both the 2022-23 Budget forward estimates and medium-term periods compared to the PEFO.
So there were slightly smaller deficits over that period of time. It continues:
The Coalition's election commitments do not materially change receipts from the PEFO.
Fair enough—I'd concur with that. It makes sense. In relation to Labor's platform, it said:
Labor's platform, if fully implemented, would result in increased deficits over the same periods relative to the PEFO …
Again, that is reflective of the commentary that occurred during the campaign.
Then we get the discussion in relation to the Australian Greens. I think the tens of thousands of Queenslanders who voted for the Greens need to reflect carefully on the Parliamentary Budget Office's election commitments analysis in relation to the Australian Greens. Bear in mind that, in their policy statement, the Greens said, 'The Greens plan is fully costed and fully funded.' Maybe they meant that in a postmodernist sort of way, where matters such as truth, reason and knowledge are all relative, and maybe it was fully costed and fully funded, compared to how exotic and bizarre it might have been in the first instance, but the reality is that the Parliamentary Budget Office report shows that the Greens policies would have had an absolutely devastating impact on this country's budgetary position. This is summarised nowhere better than in the table on page 3. Again, I commend the PBO for its work in this regard. In this table it talks firstly about the impact on the underlying cash balance—the net impact of election commitments. The coalition total to 2025-26 is actually an improvement, or would have been an improvement, of $1 billion over that period. The Australian Labor Party had a deteriorating position of $6.9 billion—so the coalition was plus $1 billion and the Australian Labor Party was minus $6.9 billion. Then we get to the Australian Greens. Bear in mind that they said, 'fully costed and fully funded'. If it's fully funded, why is it that the financial implications of their election commitments by 2022-23, through the forward estimates, were minus $26.1 billion? The impact on the headline cash balance of the Australian Greens policies was minus $112.1 billion. This is the fully costed and fully funded Australian Greens election campaigns across the 2022-23 forward estimates. Reflect on those figures. The negative impact on the underlying cash balance of the Australian Greens policies was minus $26.1 billion, the headline cash balance was minus $112.1 billion and the fiscal balance was minus $41 billion. Those are the Australian Greens fully costed, fully funded policies.
It gets even worse, and this is where things become challenging for the Parliamentary Budget Office. It would no doubt like to be able to produce some graphs using consistent x,y axes across the different costings regimes under each of the parties, but it's impossible because the Australian Greens are so far out there with their supposedly fully costed and fully funded policies.
The net impact of the PBO guidance on the underlying cash balance by party shows that the x axis for the coalition goes from zero to $1 billion; the x axis for the Australian Labor Party, which is a materially less position than the coalition's, goes from zero to $9 billion; and the x axis for the Australian Greens goes from $40 billion to minus $40 billion. That's the only way they could capture how bad the Australian Greens policies would have been for the budget of this country. Then, when you drill down into the individual policies—there's lots of good information on the Parliamentary Budget Office website. I have hundreds of pages here in relation to the costings of the Greens policies, which I intend to go through in depth. I've only had a chance to go through three at the moment. The first was in relation to the so-called corporate super profits tax. It was fully funded, apparently, fully costed. The PBO says:
There is a very high degree of uncertainty associated with this costing.
In a key assumption, the PBO also says:
Super-profits tax paid have been reduced by 20 per cent to account for an estimated behavioural response by companies …
Who would have thought that, if you actually increase taxes on people, they'd respond—for example, by taking their capital offshore with the jobs that go with them? Let's move to the ending corporate tax avoidance policy. We can see a theme here in relation to the Greens policies. Under the costing overview, it says:
There is a significant level of uncertainty associated with each component of this proposal and the uncertainty in particular components drives significant uncertainty in the overall cost.
It goes on to say:
Uncertainties arise from behavioural responses …
Who would have thought that, when you introduce Draconian tax policies and measures, people would actually respond? We'll move to the third policy. This was the granddaddy of all policies, the Greens policy to construct one million homes across Australia. If it's going to be one million, why not 10 million? Our theme continues: 'The financial implications of the proposal are uncertain, and highly sensitive to assumptions around the speed of construction, capacity within the construction industry, the cost of land and dwelling construction, the number of households that would access residential tenancies, annual operating costs and changes in the 10-year government bond rate.'
And how's this for a point from the Parliamentary Budget Office: 'It is uncertain whether the trust will be able to achieve an average cost per dwelling of $300,000.' I want to commend the PBO on their diplomatic language. They say that it's uncertain. That's a nice way of saying that it's in fantasy land. So there's a common theme there. I commend the Parliamentary Budget Office in relation to the great work and the great information they provide to Australian voters in an election context. I suggest that more of our Australian voters take advantage of that service.