Government Humiliated By Treasury And PBO On Coalition Costings

The Rudd government was humiliated today by the Parliamentary Budget Office, the Treasury and the Finance Department, after it levelled allegations at the Coalition over its election policy costings.

All three organisations issued public statements that challenged claims made earlier in the day by Prime Minister Rudd, Treasurer Bowen and Finance Minister Wong. The ministers released confidential minutes from Treasury, Finance and PBO and claimed there was a $10 billion dollar “black hole” in the Coalition’s costings.

Treasury, Finance and the PBO released statements which effectively disowned the figures. It was a major assertion of public service integrity during the caretaker period of an election campaign.

Rudd

Treasury Secretary Martin Parkinson and Finance Department Secretary David Tune said: “These costings were not prepared under the election costings commitments’ process outlined in the Charter of Budget Honesty Act 1998. Different costing assumptions, such as the start date of a policy, take-up assumptions, indexation and the coverage that applies will inevitably generate different financial outcomes. The financial implications of a policy may also differ depending on whether the costing is presented on an underlying cash balance or fiscal balance basis.”

The Parliamentary Budget Office, an organisation established during the last Parliament to provide independent costings of party policies, also disputed the government’s claims. Its head, Phil Bowen, said it was wrong to claim the minute released by the government was a costing of the Coalition’s policies.

Downloadable PDFs of the documents released by the government, the PBO and Treasury-Finance are shown below.

The debacle for the government began when the Prime Minister, Treasurer and Finance Minister held a press conference this morning.

  • Listen to the Rudd-Bowen-Wong press conference (38m)
  • Watch Rudd (1m)

Text of media release from the Treasurer, Chris Bowen, and the Minister for Finance and Deregulation, Senator Penny Wong.

$10 BILLION HOLE PUNCHED IN COALITION COSTINGS

Treasury, Department of Finance and Deregulation and Parliamentary Budget Office figures released this morning have exposed a $10 billion hole in the savings claimed by the Coalition yesterday.

Rather than the $31.6 billion save that Shadow Treasurer Joe Hockey spoke about yesterday, these independent figures below show that total saves are $20.8 billion.

This means there is a hole in the Coalition’s costings of $10 billion.

This includes:

  • Claiming an additional $2 billion in savings from not proceeding with the Low Income Superannuation Contribution. The correct saving is $1.7 billion across the forward estimates, not the $3.7 billion Mr Hockey is claiming.
  • Claiming a saving of $5.2 billion from reducing Australian Public Service staffing by 12,000. The Department of Finance has costed this saving at around $2.8 billion, more than $2 billion less than Mr Hockey is claiming. The Parliamentary Budget Office has also estimated that more than 20,000 public service jobs would have to be cut to deliver the $5.2 billion in saving Mr Hockey is claiming.
  • The vast majority of the $5.1 billion claimed save from discontinuing free permits in the Jobs and Competitiveness Fund does not impact the underlying cash balance.
  • Only $300 million of the $1.5 billion save from discontinuing the Clean Energy Finance Corporation can be claimed as only this portion hits the budget bottom line.

Black Hole

Documentation to support these figures is attached.

Documents Released By The Government

13-08-29_treasury-minute

13-08-29_pbo-minute

13-08-29_finance-minute

Statement Released By The Parliamentary Budget Office

13-08-29_pbo-statement-on-costings

Statement Released By The Treasury And Finance Departments

13-08-29_treasury-finance-statement-on-costings
 

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