Taylor criticised Chalmers for not setting a benchmark for tax as a percentage of gross domestic product, a key point for the Coalition after it set a goal of 23.9 per cent a decade ago.
“Tax has been going up. Those fiscal guardrails, by the way, the reason they are so important is they discipline the government. They discipline the bureaucracy. They discipline colleagues, and Jim Chalmers has lost control,” Taylor said.
The Coalition is vowing to bring the tax target down and to reduce spending growth at the same time, triggering a row with Labor on Sunday about potential cuts to programs.
“You would ensure, as we did when we were last in government, your economy grows faster than spending,” Taylor said.
“Crucial to that is: boost growth; make sure you’ve got a strong, growing economy. That’s why we’ve said we’ll up the productivity goals – Labor’s given up the ghost on that – and make sure that the economy is growing faster than spending.”
The budget will show that tax has fallen from 23.7 per cent of GDP last year to 23.1 per cent this financial year, according to sources who spoke on condition they were not named. The new forecast compares with an estimate of 23.4 per cent for the same period in the last budget update.
In dollar terms, the lower tax-to-GDP ratio equates to about $6 billion in revenue forgone compared with the slightly higher ratio forecast last year.
However, tax receipts will rise in dollar terms from $633.4 billion last year, reflecting the bigger economy. The growth in payments will outstrip the increase in revenue, dragging the budget back into deficit.
The government will cite the tax forecast to assure voters it is doing what it can to limit the tax burden on workers, at a time when the Coalition is blaming Labor for loading the federal budget with additional spending.
While the Coalition indicated on Sunday it would support the government’s latest spending initiative – a $1.8 billion extension in the subsidies for household energy bills – it also said the policy was giving households something they had already paid for with their taxes.
Opposition Leader Peter Dutton called the bill relief a “Ponzi scheme” – a fraud that pretends to offer a financial return by paying early investors with the money collected from later investors – even though Coalition frontbenchers indicated they would support the policy.
The budget will contain $2.1 billion in savings and shifts of spending into other areas, just a tenth of the $22 billion the government announced in its first budget in 2022.
The cuts include another $720 million reduction in expenditure on consultants, contractors and labour hire, taking to almost $5 billion in savings in this area since Labor took office.
Finance Minister Katy Gallagher said the government had made $95 billion in either cuts or reprioritisations since the last election.
“Saving almost $95 billion in a single term of government has meant we can invest in the things that matter most, like cost-of-living support, Medicare and housing,” she said.
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The Coalition has signalled it will save $6 billion a year by slicing up to 36,000 public servants, prompting accusations from the government that it will reduce services and start re-employing labour hire workers and consultants.
On Sunday, Taylor said the government had allowed the bureaucracy to grow while consumer service had gone backwards.
Taylor would not confirm a 36,000 cut, only confirming the Coalition wanted to reduce the public service back to its pre-pandemic level.
“What we’ve been very clear about is we want to get back to where we were when we were last in government,” Taylor told the ABC’s Insiders program. “That shouldn’t be in areas of frontline services. It should be in the back-office areas.”
The Coalition has opposed $100 billion in government programs. They include three large off-budget investment vehicles, including the $19 billion Rewiring the Nation Fund, the $20 billion National Reconstruction Fund and the $10 billion Housing Australia Fund, plus Melbourne’s Suburban Rail Loop and the current electric vehicle fringe benefits tax discount.
With the budget heading back into deficit after two years of surpluses, Labor has limited means to offer financial help without being blamed for fuelling inflation and delaying further cuts to official interest rates.
Albanese seized on the issue of working from home on Sunday morning to accuse Dutton of wanting Australians to be forced to go into the office more days each week, incurring more transport costs.
The Labor attack is based on a calculation that Australians would pay $3056 in transport costs, on average nationwide, to get to work two days a week – the key figure in the assumption about what they would have to pay if the Coalition opposed working from home.
After taking into account parking costs of $20 a day, Labor estimated the total cost would be $4976 on average.
But Dutton has not called for the private sector to halt working from home, and he has instead focused his criticism on the number of public servants who are allowed to work remotely for several days a week, limiting the policy to the Commonwealth.
“No one is banning work-from-home arrangements,” Coalition finance spokeswoman Jane Hume said. “That is a Labor lie.
“It’s shameful the way the Labor Party has tried to twist this policy into something it isn’t.”
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