Dutton’s lunch policy a threat to budget: Treasury

Peter Dutton’s plan to revive taxpayer-funded business lunches would cost the budget $1.6bn a year and potentially far more, according to Treasury analysis commissioned and released Labor.

Treasurer Jim Chalmers. Picture: NewsWire / Nadir Kinani

Peter Dutton’s plan to revive taxpayer-funded business lunches would cost the budget $1.6bn a year and potentially far more, according to Treasury analysis commissioned and released Labor.

After Anthony Albanese used the year’s first caucus meeting to lash the Opposition Leader for subsidising “entertainment liaisons” and golf, Labor released Treasury analysis warning the policy had significant risks to the budget.

The Albanese government asked Treasury to cost a policy with the same parameters given by the Coalition when it announced a plan to provide businesses a yearly tax deduction of up to $20,000 for taking ­clients out to restaurants, cafes and pubs.

The measure, available to businesses with a turnover of up to $10m, would see entertainment expenses excluded from the fringe benefits tax for two years, although alcohol is carved out of the tax break.

Since the announcement, the Coalition has specified the policy would only include meals and not cover business outings at strip clubs, golf and sporting events, which may make it cheaper than Treasury’s estimates.

The Coalition has not released a costing of the policy but sources say it will set taxpayers back by less than $250m over two years.

The Treasury estimates released by Labor base the $1.6bn yearly cost on a “conservative” assumption that the 2.6 million eligible businesses would claim an average $2500 deduction per year.

Treasury warns the cost could rise significantly if the take-up of businesses increased by more than the “conservative” assumption, exceeding $10bn a year if every eligible business claimed the maximum deduction.

With Labor set to weaponise the costings in the first parliamentary sitting day of the year, Jim Chalmers declared the “Liberals’ taxpayer-funded long lunches policy would smash the budget”.

“We now know this policy costs billions of dollars but we still don’t know what Peter Dutton would cut to pay for it,” the Treasurer said. “After three years the best they can come up with is billions of taxpayer dollars to subsidise long lunches.

“The contrast is clear: tax cuts for workers under Labor or tax breaks for bosses’ long lunches under the Liberals.

“Peter Dutton is the biggest risk to household budgets, the ­national budget and the broader economy.”

Finance Minister Katy Gallagher said Mr Dutton “wants to spend hundreds of millions of dollars of their money to subsidise business lunches”.

“Peter Dutton’s priorities are all wrong and his policies will leave Australians worse off,” Ms Gallagher said.

When he released the policy last month, Mr Dutton said it would be good for the struggling hospitality sector.

“We want other small businesses to spend more at their local cafes, clubs and pubs.

“And if they can take their employees to the venues and pay for a meal as part of a milestone sales event, or acknowledgment for their hard work, then it is a win-win for both businesses.

“It will help retention and provide a reward to employees.”