Cost of fast-tracking tax cuts could fund $225b of recovery investment instead, new PBO costings reveal
As calls grow for a $220b infrastructure spend to tackle the recession, new costings completed by the Parliamentary Budget Office, at the request of the Australian Greens, have revealed that the Government could fund $225 billion in job-rich major infrastructure projects for the same cost to the Budget of bringing forward round 2 of planned personal income tax cuts.
Bringing forward personal income tax cuts for millionaires has been called for by Liberal and Labor MPs as well as big business groups, but instead of hoping for trickle down economics to miraculously work this time around, the government could create hundreds of thousands of jobs directly over a decade by:
- Building High Speed Rail from Melbourne to Brisbane (at a cost of $130b); and
- Building 375,000 public housing units (at a cost of $95b);
The PBO costing details how much government debt could be serviced for the $28b PBO-assessed cost of fast-tracking the already legislated tax cuts.
Both infrastructure projects combined come in for the same price tag as the fast-tracked tax cuts. The study secured by the Greens during the Gillard power-sharing Parliament assessed the cost of high speed rail from Melbourne to Brisbane at $114b in 2012 terms, which we’ve adjusted for inflation. The PBO has assessed the investment cost of the first ten years of the Greens' 15 year program to build 500,000 public housing units at $84b, by which time approximately 330,000 homes will have been built, so the cost of building 375,000 homes is thus estimated at $95b.
The infrastructure proposal would not add to net debt, as the borrowing would be invested in Commonwealth-owned assets. The government’s own recent economic update showed that despite current levels of gross debt, the interest we are paying is still lower than during the first half of John Howard’s Prime Ministership.
There are 14,900 people earning more than $1m per year. High income earners, including millionaires, stand to get the most benefit of any income group. By bringing forward stage 2 tax cuts, millionaires will get $2,430 more in their pocket. Someone pushed onto the new JobKeeper rate will lose $10,350.
Quotes attributable to Greens Leader, Adam Bandt:
“As Australia suffers through the COVID-induced great recession, the government must support the million Australians now unemployed, not the millionaires and super-wealthy.
“I’d rather us build our way out of recession and end homelessness than give Clive Palmer an early tax cut.
“As calls grow for massive public infrastructure spending to deal with the recession, these figures show the government can afford to invest big this Budget while still keeping JobKeeper and JobSeeker going.
“For what it will cost to bring forward the Liberal/Labor tax cuts, we could create secure jobs by building high speed rail and public housing instead.
“In this Budget, the trickle-down Treasurer should make full employment his priority.
“Tax cuts for billionaires mean longer unemployment for everyone else.
“We’ve got Depression-era jobless figures but profit share is at an all time high. Fast-forwarding tax cuts will make inequality worse and the recession last longer.
“High income earners benefit the most from these tax cuts pushed by Liberal MPs, Labor MPs and the big business lobby.
“Under round 2 of the Liberal/Labor tax cuts, the million Australians without a job will get nothing, low income earners will get a milkshake and those on six-figures will get $2,400. Under round 3 of the Liberal/Labor tax cuts, which might also be brought forward, multi-millionaires get $11,500.”