Albanese Government leans on public service savings to cover election promises

Labor will rely on continuing to cancel external consultants to the public service to offset its election commitments, despite warnings that’s a pool that will eventually dry up and ongoing savings are needed.

Treasurer Jim Chalmers and Finance Minister Katy Gallagher released details of how much Labor’s election policies cost on Monday, five days out from polling day.

They say the books will show a better position by the end of the election than in the March budget.

The costings show just two savings measures over the next four years: $6.4 billion from further cuts to public service consultants, contractors and labour hire, and $760 million in anticipated revenue from increased student visa fees.

Senator Gallagher said this continued the focus from the past term of ending external contracts that were “very expensive (and) didn’t deliver quality services”.

She anticipated some of the savings would also come from cracking down on travel, hospitality, advertising and legal services.

But CEDA chief economist Cassandra Winzar said while it was a worthy goal to cut down on contractor spending, “it’s not going to really shift the dial on the budget position”.

The budget had enjoyed “a couple of nice years” thanks to higher commodity prices and more people being in work, but there were still real concerns about its long-term standing.

“When we look further out in the budget position, it’s pretty dire straits and we do need to be addressing both the expense side of the budget and the revenue side of the budget to make sure that we can fund all the sorts of things that Australians want for all the services that people desire,” she told The West.

“We absolutely need to be looking at where there are budget savings and ongoing budget savings, not just one-offs.”

Dr Chalmers said of the $10 billion in new measures announced during the campaign, about $4 billion had already been covered in the March 25 Budget or the pre-election fiscal outlook released by Treasury during the campaign period.

The rest is more than covered by the anticipated savings.

“These costings show that we are managing the budget and the economy in a responsible and a considered and a methodical way,” he told reporters in Brisbane.

“We will finish this election campaign with the budget in a stronger position than at the start of the election campaign. We have improved the budget position by more than a billion dollars.”

The biggest ticket item Labor has announced during the election is $10 billion to build 100,000 new homes reserved for first-time buyers, in a combination of grants and loans to States and property developers.

But the documents released on Monday show this will cost the Budget just $604.2 million over the next four years, meaning the bulk of the money will need to be found later on.

The simplified tax deduction, also announced at Labor’s campaign launch, will cost $2.4 billion over the next four years since it doesn’t start until people file their taxes in mid-2027.

It is also an ongoing measure, as is the “top-up” tax cut announced on Budget night.

The Coalition is yet to release its election costings.

Opposition Leader Peter Dutton on Monday pointed out that in 2022, Labor released its costings on the Thursday before the election, and promised: “We’ll release them in due course.”

Shadow treasurer Angus Taylor said only his books would be made public “in the next couple of days” but said they would show a better bottom line than Labor.

“It will be a stronger position, make no mistake about it, and that’s because Jim Chalmers has lost control of his colleagues. He’s lost control of the budget,” he said.

“You can rest assured that under a Liberal National Government, you will have a position which delivers a stronger economy, stronger productivity, stronger real wages.

“That’s what we stand for, and that’s what we’ve been working towards all of this term.”