Allan government used outdated figures to build $11bn ‘black hole’ claim

Internal Treasury documents show the Allan government relied on outdated payroll-tax estimates when calculating the Coalition’s ‘$11.1bn budget black hole’.

The $11bn black hole claim is a key plank in the strategy of Jacinta Allan and Jaclyn Symes to claim the Liberals will cut frontline services ahead of next year’s election. Picture: NewsWire/Ian Currie

The Allan government used outdated payroll-tax assumptions in modelling that underpins its claim the Victorian Coalition has an $11bn budget black hole, with internal Treasury documents revealing a discrepancy of up to $145m on just one policy.

Department of Treasury and Finance projections released under Freedom of Information laws show the government did not take into account downgraded estimates of payroll-tax revenue from non-government schools when it calculated the impact of the opposition’s policy to reinstate an exemption.

New Liberal leader Jess Wilson seized on the figures to argue the government’s claims were “embarrassingly inaccurate” and served only to prove “Labor’s own financial illiteracy”.

“The government’s claims are contradicted by their own figures. This is nothing more than desperate politics from a tired, incompetent Labor government that cannot manage money,” she said.

The Allan government stood by its modelling on Wednesday, a spokesperson saying: “Jess Wilson is presiding over an $11.1bn budget black hole and it means one thing: cuts to pay for it. Cuts to schools. Cuts to hospitals. Cuts to services.”

Treasurer Jaclyn Symes’s office last month took the unusual step of costing the opposition’s tax policies more than a year out from the next election, calcu­lating the combined impact of scrapping the Emergency Ser­vices and Volunteers Fund, exempting more first-home buyers from stamp duty, abolishing the short-stay accommodation levy and reinstating payroll-tax exemptions for non-government schools.

Ms Symes and Premier Jacinta Allan then used the “massive $10.8bn black hole” claim to repeatedly accuse Ms Wilson of planning to cut frontline services, and has since revised the figure to $11.1bn after adding the Liberals’ proposal to align Melbourne’s congestion levy with Sydney

The opposition has rejected the modelling as flawed, arguing the total budget impact of its tax policies is about $5bn.

Labor’s modelling states re­instating the payroll-tax exemption for high-fee non-govern­ment schools would cost more than $588m over four years, based on a flat $147.1m annual revenue estimate contained in the state budget.

Internal DTF projections released under FOI show the department no longer forecasts revenue at that level. Instead, the updated projections suggest ­payroll-tax collections from these schools would total less than $443m across the forward estimates – about $145m less than claimed in the government’s modelling.

Even when including the Mental Health and Wellbeing Levy and the Covid Debt Levy – revenue Labor’s modelling did not appear to factor in – the revised total comes in about $90m lower than the figure used in the government’s claim.

The FOI material includes updated internal costings tables and budget-development notes that show the revenue line was revised months before the government publicly released its costings of opposition policies.

The discrepancy raises questions about whether the government’s $11bn black-hole figure incorporates other superseded assumptions when assessing the Coalition’s policies.

It comes on top of questions over the government’s claim that the opposition’s policy to abolish the Emergency Services and Volunteers Fund would cost $7bn. While the opposition has pledged to abolish the levy, it says it would reinstate the Fire Services Property Levy it replaced – a move it argues would cost just over $3bn to the budget, around $4bn lower than the figure used in the government’s modelling.

The opposition also argues the government has misinterpreted its pledge not to introduce new taxes as a promise not to index taxes and charges, an assumption that adds a further $925m to Labor’s black-hole calculation.

The Allan government is seeking to follow a well-worn Labor strategy of framing the Liberals as a threat to essential services through the prospect of budget cuts. The narrative around the $11bn budget black-hole claim is shaping as a key battleground ahead of the Nov­ember 2026 election.

In her speech to CEDA this week, Ms Wilson promised “no reductions to frontline services under a Liberal government”.