Federal election 2022: ALP’s decade of deeper deficits sparks Scott Morrison’s tax warning

Scott Morrison will make an ­election-eve plea to stick with the Coalition amid fears of a global recession, rising interest rates and inflation.

Scott Morrison says ‘what we have always seen from the Labor Party is when they can’t manage money, they come after yours in higher taxes’. Picture: Jason Edwards

Scott Morrison will make an ­election-eve plea for voters to stick with the Coalition amid fears of a global recession, rising interest rates and soaring inflation, after Labor revealed Australia’s deficit bill would be more than $8bn ­larger under Anthony Albanese.

The Prime Minister seized on the unemployment rate plunging to a 48-year low of 3.9 per cent and Labor’s costings dump two days out from the election to warn ­Australians they would be hit with higher taxes to fund the Opposition Leader’s policy agenda.

Labor’s 16-page Plan for a ­Better Future, released by Treasury spokesman Jim Chalmers and finance spokeswoman Katy Gallagher on Thursday, under the backdrop of worsening global economic shocks, showed deficits would rise by a “modest” $7.4bn over the next four years to pay for the ALP’s election policies.

The costings plan, which does not capture Labor’s $52bn in “off-budget” election promises, said 19 savings and revenue measures would drive $11.5bn in improvements to the bottom line and see deficits “decline both in dollar terms and as a percentage of the economy each year”.

Anthony Albanese says he is focused on quality investments and getting rid of the ‘waste and the rorts from the budget’. Picture: Getty Images

Compared with the Coalition’s costings plan, promising a $1bn improvement to the budget, Labor deficits would be $8.4bn larger to fund $18.9bn in new investments over four years.

Despite historically low jobless levels, with the unemployment rate in the key election state of Western Australia falling to 2.9 per cent in April, the ASX and international stock markets tumbled after Wall Street registered its worst day of trading since 2020.

The benchmark S&P/ASX 200 index slumped 1.7 per cent on Thursday, with ASX-listed retailers bearing the brunt of the sell-off, after shares in department store giant Target crashed 25 per cent in New York.

Australian retail giant Wesfarmers, owner of the Bunnings and Kmart chains, plunged 7.8 per cent, while Coles and Woolworths shares also took a hit.

Entering the final day of the campaign, Mr Morrison attacked the ALP costings as a “piecemeal attempt” to explain its finances and warned “what we have always seen from the Labor Party is when they can’t manage money, they come after yours in higher taxes”.

“That is the risk of Labor. I think Australians think $7.4bn is a lot of money,” the Prime Minister said. “When we released our costings we were reducing deficits by $1bn. On top of that, there is $52bn worth of off-balance sheet borrowing to fund more and more spending by the Labor Party.”

Mr Morrison said Labor’s $407m plan to abolish temporary protection visas, which the ­Coalition claimed would fund welfare payments for visa holders, would result in a budget blowout.

“When (Kevin Rudd) abolished temporary protection visas in ­August 2008, what followed was 800 boats, 1200 lives lost and 50,000 people illegally entering Australia,” Mr Morrison said. “The cost of that was $17bn.

“Labor have learned nothing. They can no more manage the borders, than they can manage money, and you’ll pay for it.”

After recommitting Labor to honouring the government’s stage three tax cuts for middle to high-income earners, Mr Albanese ­rejected suggestions he would ­impose higher taxes on them if elected on Saturday.

“We’ve outlined very clearly what our plans are,” the Labor leader told Sky News.

“People are entitled to have that certainty of the tax cuts that have been legislated and of course the Medicare levy and the NDIS levy are in place and we won’t be changing them.”

Asked how Labor could be trusted to manage the economy when it was promising to impose larger deficits on Australians, the Opposition Leader said he was ­focused on quality investments and getting rid of the “waste and the rorts from the budget”.

“The gap between us and the government of $7.4bn is explained by the investments that we’re making in three areas – childcare, skills and training … and our clean energy program,” he said.

 

After The Weekend Australian revealed on May 7 that Labor would deliver deficits up to $10bn larger than the Coalition, Mr ­Albanese claimed this was “not the plan”. Following confirmation of an $8.4bn difference between Labor and Coalition on deficits, Mr Albanese on Thursday denied he had misled voters and stood by his comments. Senior Labor figures had told The Australian that deficits would be “up to” and “in the vicinity” of $10bn higher.

Labor’s $11.5bn in budget ­improvements include ATO crackdowns on individuals and multinationals ($4.9bn); slashing advertising, travel, legal and external labour expenses ($3.5bn); ­reducing and cutting community and regional funds ($750m); and tougher anti-competition laws ($558m).

The most expensive items in Labor’s costings are: cheaper childcare; fee-free TAFE and additional university places; more Indo-Pacific foreign aid; aged care funding; Powering Australia clean energy programs; and health policies boosting support for Medicare and affordable medicines.

Dr Chalmers and Senator Gallagher said their plan to invest in childcare, clean energy, skills and training would “generate an economic dividend”.

“Every dollar of difference ­between us and the government is carefully calibrated to deliver a bigger economic return,” Dr Chalmers said.

He said Labor’s policies would grow the economy to combat ­inflation and get “real wages ­moving again”. He said increased wages for aged care workers, as promised by Labor, could not be costed until a decision was made by the Fair Work Commission.

“We are realistic about the scale of the challenge that we will be inheriting,” Dr Chalmers said.

“No-one can just flick the switch and make this trillion-­dollars of debt disappear. What we’re doing here is making a start. We are doing it in the most ­responsible, forward-looking way that we can.”

Despite attacking the Coalition over “$19.7bn in JobKeeper ­payments to companies with ­rising revenues”, Dr Chalmers ­conceded that a Labor government would not seek to recoup the money.

Senator Gallagher said: “Our plan has deficits but declining in dollar terms and as a percentage of the economy every year.

“Our responsible investments account for no more than an extra 0.4 per cent of the total budget in any year, and it accounts for less than 0.1 per cent of GDP in any year of the forward estimates.”

The opposition finance spokeswoman said about 19,000 people on temporary protection visas would be shifted to permanent visas.

“Under the new visa subclass it would allow the same support as under existing visas so they would be entitled to work, access Medicare, income support, English-language tuition and things like trauma counselling services,” Senator Gallagher said.