Labor details $6.4b in savings as S&P warns AAA rating at risk
Make us a preferred source
Make us a preferred source on Google
The news: Labor is promising to save $6.4 billion over the next four years by reducing the government’s reliance on consultants and cracking down on expenses, while raising an additional $760 million through increased student visa fees.
The numbers: Announcing the party’s costings five days out from the election campaign, Treasurer Jim Chalmers and Finance Minister Katy Gallagher said their savings would leave the budget bottom line $1 billion better off over the forward estimates, which offsets the new spending that has been announced since the March budget.
The deficit for 2025-26 is now forecast to be $41.9 billion, down from the $42.2 billion estimates in the Pre-Election Economic and Fiscal Outlook.
Chalmers and Gallagher said they would save $6.4 billion by cracking down on the use of consultants, contractors and labour-hire, as well as travel, hospitality and property expenses.
The context: The ministers announced Labor's costings slightly earlier than in previous years in a bid to place further pressure on Opposition Leader Peter Dutton, calling on him to “come clean” on “secret cuts” to pay for his nuclear power policy.
Dutton has already promised to save $10 billion by reducing the size of the public service by 41,000 positions over five years.
Labor’s costings were announced on the same day that ratings agency S&P Global warned both Labor and the Coalition that their level of spending was pushing up government outlays to the highest point since World War II, risking Australia’s AAA credit rating.
The report from S&P analysts Anthony Walker and Martin Foo said an “overt focus on the central government’s preferred fiscal metric, the ‘underlying cash balance’, coupled with a proliferation of ‘off budget’ spending programs, that are excluded from this metric, is increasingly obfuscating Australia’s fiscal position and borrowing needs”.
They said the AAA rating “may be at risk if election promises result in larger, structural deficits, and debt and interest expenses rising more than we expect”.
What they said: “It is long past time for the Coalition to come clean on their secret cuts to pay for their nuclear reactors,” Chalmers said.
“They need to come clean on what their secret cuts for nuclear reactors means for Medicare, for pensions, and payments, for skills and housing, and other essential investments in the budget.
“We have put our costings out on the Monday of the final week of the election campaign. We call on the Coalition to release their costs and their cuts immediately.”
The source: Labor campaign
