Coalition’s $1.4bn in new spending sticks to pledge

The Coalition has delivered on its pledge to run a low-spending campaign, with just $1.4bn in new spending over four years.

Finance Minister Mathias Cormann and Josh Frydenberg front the media in Melbourne yesterday. Picture: AAP

The Coalition has delivered on its pledge to run a low-spending campaign, announcing just $1.4 billion in new spending over the next four years, and $3.8bn over a decade, as it delivered its final election costings yesterday.

The extra spending will be offset by $1.5bn in cuts to the public service, to be delivered under a new “efficiency dividend” for government departments if Scott Morrison wins tomorrow.

Josh Frydenberg said the ­Coalition had maintained its commitment to responsible budget management, with only modest additional spending commitments beyond those unveiled in the April 2 budget.

“This is more than offset by a reduction in departmental funding of $1.5bn over the forward estimates, building to $5bn over the medium term,” the Treasurer said.

“The net effect of all our policy commitments announced since the budget during the election campaign is a slight improvement to the budget surplus in each year of the current forward estimates period, without increasing taxes.”

Labor’s costings, released a week ago, confirmed $154bn in new revenue-raising measures over a decade, funding $67bn in election policies and $87bn dedicated to delivering bigger budget surpluses.

Opposition Treasury spokesman Chris Bowen said the ­Coalition’s costings showed the government was “lying” to the people of Melbourne when it pledged to spend $4bn on the city’s shelved East-West Link, with the funding not included in yesterday’s costings.

“Which is it? Are they billing the East-West Link or are they not? Is it in the budget or is it not? On today’s announcement, it is not,” Mr Bowen said.

C O S T I N G

The Coalition confirmed funding for the East-West Link was treated as a contingent liability that would be reconciled in the budget when the funding was called on.

Labor has promised about $2bn in public sector cuts, through its crackdown on contractors and consultants.

Mr Frydenberg said the ­Coalition would let departmental chiefs decide where cuts could be made by extending the public sector “efficiency dividend” initially introduced by Labor. Key agencies will be exempted from the savings drive, including the Australian Signals Directorate, the Office of National Intelligence, the National Disability Insurance Agency, and the Australian Securities and Investments Commission.

A re-elected Coalition government would keep the enforced public service savings measure at its current level of 2 per cent for a further two years, before stepping it down to 1.5 per cent in 2021-22 and returning to the base rate of 1 per cent from 2022-23.

“This will ensure commonwealth government agencies continue to focus their efforts on achieving value for money for taxpayers by making sure our government administration is as efficient, productive, effective and responsive to community needs as possible,” Mr Frydenberg said.

Labor has pledged to deliver bigger surpluses over the coming decade than the Coalition to pay down debt, on the back of its $32.4bn negative gearing clawback and $58bn plan to end cash refunds for unused franking credits.