The Morrison government has argued that Labor cannot be trusted to manage the federal budget.
Scott Morrison and the finance minister, Simon Birmingham, have both claimed Labor’s pandemic policies would have cost an extra $81bn since 2020.
But where did this $81bn figure come from – and is it an accurate reflection of the net impact of Labor’s policies?
Whose costings are these?
The claim was first made in a piece by Birmingham in the Australian on 8 February. It was repeated in a follow-up story the next day, accompanied by an infographic sourced to the finance department.
But in Senate estimates, Birmingham revealed “the modelling was undertaken within the government” – not by the department – and his office had to call the newspaper to have that attribution corrected.
Labor’s shadow finance minister, Katy Gallagher, said the numbers were “cooked up” and “dodgy” because they were produced by the offices of Birmingham and treasurer Josh Frydenberg.
What is the $81bn?
The costings include Labor policies, extensions of jobkeeper and the coronavirus supplement.
The Labor policies were:
The $300 vaccine incentive payment for those who received both doses of the vaccine, at a cost of $6bn
Free rapid antigen tests “for all”, which the Coalition estimated to cost $5bn
The pandemic support proposals were:
Expanding the eligibility of jobkeeper to 2 million more people, including short-term casuals and visa-holders, estimated to cost $25bn
Maintaining $1,500 payments for all jobkeeper recipients rather than tapering down and lowering rates for part-time workers ($10bn)
Extending jobkeeper for a further quarter to June 2021 ($10bn)
Maintaining coronavirus supplement payments at the $550-a-fortnight rate to March 2021, then $350 to June 2021 ($25bn)
Are these costs disputed?
The vaccine incentive payment cost is not contentious. Anthony Albanese said this would cost $6bn when he announced it in August last year – although by October, Labor said the policy was no longer required.
In estimates, Gallagher questioned how the free RAT policy was costed. Birmingham argued if the costings were “ill-defined” it was because the free RAT policy itself was. He suggested $5bn was a “conservative” estimate.
The government costings, seen by Guardian Australia, indicate the assumption was for 20 free RATs over six months for all Australians, except concession card holders already entitled under the government scheme.
How do the jobkeeper claims stack up?
Labor supported jobkeeper in parliament but moved symbolic “second reading amendments” calling on the government to consider expanding it.
Outside parliament, shadow ministers did suggest that if Labor had its way the changes to jobkeeper would be law.
For example, Labor criticised the exclusion of 1 million casuals with less than 12 months’ service from jobkeeper.
“Labor wants to see more workers maintain a connection with their employer – that has been our goal since day one of this crisis,” the shadow treasurer Jim Chalmers and other shadow ministers said in a statement.
On 1 April 2020, Labor’s Kristina Keneally and Linda Burney wrote to the government asking it “to extend coronavirus support to temporary visa holders and migrant workers in Australia”.
When jobkeeper was tapered and cut, Albanese said it was “not the time to withdraw support for the economy”.
But in other instances the expansion or extension of the program was qualified, and the government costings do not take this into account.
For example, Chalmers called in March 2021 for a “temporary, responsible, targeted extension of the JobKeeper program, not for everyone and not forever, but for those businesses which are still impacted”.
Rolling over the $10bn cost of jobkeeper from the March quarter into June inflates the cost, in those circumstances.
And on jobseeker?
The cost of extending the coronavirus supplement on jobseeker is questionable.
When the payment was reduced from $550 to $250 per fortnight in September 2020, Albanese criticised the “substantial reduction” but it’s not clear Labor was committed to keeping the old rate.
The government costings assume Labor was in favour of keeping the $550 per fortnight coronavirus supplement until March 2021, but an amendment by Burney, the shadow social services minister, only called for $250 per fortnight.
Chalmers said the “highest priority” was to commit to a permanent increase to the jobseeker rate, which the government did in February 2021 with a $50 per fortnight rise. Since then, Labor has accepted that rate and won’t even review it in government.
The government’s costings assume that Labor was up for a $350 per fortnight coronavirus supplement for the June 2021 quarter, because in March 2021 Labor senators voted for a Greens Senate motion calling on the government to “urgently increase jobseeker payment to be above the poverty line”.
This is based on what the Australian Council of Social Services was calling for, not Labor’s policy at the time (which was $250 a fortnight) or what they’ve settled for now ($50 a fortnight extra).
Take the good with the bad?
The $81bn claim seeks to make Labor wear the increased cost of the measures, without Labor being able to point to the positive impact if the government had adopted their ideas.
Presumably Australia’s jobs recovery would have been even stronger if more casuals were included in jobkeeper, and workforce shortages would have been shorter or less severe if rapid antigen tests were more available over summer.
And once you’ve set your coordinates for the universe of counterfactuals, where does it end?
Maybe the $19.7bn paid to companies whose revenues actually increased over the life of the $89bn jobkeeper program would not have been spent if it were better designed to begin with.
If treasury had implemented a clawback mechanism after the first three months of jobkeeper, perhaps some of the $15.6bn paid to businesses that didn’t have the required revenue downturn in the September 2020 quarter would have been recouped?
The verdict
It is true that if Labor’s prescriptions were followed, more would likely have been spent on jobkeeper and jobseeker during the pandemic. And there is no such thing as a free RAT.
It is questionable that the sum of these and other Labor policies is as high as $81bn, given Labor wanted to narrow the eligibility for jobkeeper as it was phased out and the assumptions that inflate the costing of the coronavirus supplement.
