How much do election promises cost? And why have we had to wait so long to see the costings?
- Written by Stephen Bartos, Professor of Economics, University of Canberra
With the May 3 federal election less than a week away, voters have only just received Labor’s costings and are yet to hear from the Coalition.
At the 2022 election, the costings were not released for nearly two months after polling day.
Deputy Opposition Leader Sussan Ley last week told Sky News the Coalition costings will be “released in the lead up to election day and will be able to be fully interrogated”.
This is now too late for the voters who have already cast their ballots. We have seen a record number of pre-poll votes this election, with more than 2.3 million as of Saturday. This means a sizeable percentage of the electorate has voted without knowing what their votes will cost.
Voting without all the facts
Whichever side wins, taxpayers eventually pay to implement policies. So knowing at least in broad terms the costs of the policies would be helpful.
The Coalition has probably had many of its policies costed by the independent Parliamentary Budget Office. This process is thorough and impartial.
Importantly, the Parliamentary Budget Office costs policies over ten years. This allows the full costs of policies to be understood better. Some policies such as large infrastructure take many years before the full impact on the budget is felt.
Labor has already published the costs of many of its policies in the March 25 federal budget. This only covered the forward estimates, three years into the future, but is reliable for most policies. But we still need the costings for policies announced post-budget.
The true picture?
Even when we see the costings from both of the main parties, we can have no confidence their lists are accurate and complete. Parties may omit costings that might attract criticism.
They may also present costings prepared by consultants rather than the Parliamentary Budget Office. You may recall controversy late last year over private modelling of the Coalition’s plans for nuclear power.
Unfortunately we have to wait until after the election for a comprehensive and independent set of costings.
The Parliamentary Budget Office does not publish its full list of costings (in the election commitments report) until well after the election. This is either 30 days from the end of the caretaker period or seven days before the new parliament first sits, whichever comes later.
The election commitments report has some accountability value in relation to the party that forms government but does not help inform voters. It is a mystery why anyone would be interested in the costs of policies of the losing side. But they still must be published, according to electoral law.
The report must include the major parties, although minor parties and independents can also be included in the report if they wish.
Are there other approaches?
By contrast, in New South Wales the state Parliamentary Budget Office publishes a complete set of costings five days before the election. Policies announced after this date miss out but these rarely affect the budget bottom line.
Although, as occurs federally, many voters cast their ballots in advance, at least NSW’s approach gives most voters a chance to see the costs. This encourages the major parties to compete to produce a fiscally responsible total.
The NSW approach is self-policing. Each major party studies the statements and if the other side omits something – large or small – they rapidly and loudly complain. Parties therefore try to make their policy lists as accurate as possible.
Both sides are obliged by law to provide the budget office with all the proposed policies of the leader’s party.
Toting up all the costs
Federally, the budget office takes on the time-consuming job of tracking down all the policy announcements to cost and include in its post-election report.
The differences arise from the different legislation that applies to each PBO.
NSW has arguably an easier job because it costs policies only for the premier and leader of the opposition. The federal budget office costs for all members of parliament.
The federal system requires policies submitted during the caretaker period, and their costings, must be published “as soon as practicable”. But major parties are highly unlikely to submit a policy only to have it and its costing released at a time not of its choosing.
The requirement is likely motivated by transparency, but clashes with political reality. In NSW costings remain confidential until the leader advises the budget office the policy has been announced. This gives parties a way to have policies costed with a low risk of their premature release.
DIY assessments
Federally, there are other ways to estimate the costs of policies. The budget office has a Build your Own Budget Tool, and a tool for modelling alternative income tax proposals (SMART), both available online.
These provide a fair approximation and are often used by journalists trying to get behind political announcements.
The OECD lists 35 independent fiscal bodies in 29 OECD countries responsible for assessing election costings. Some are tiny, with just a few analysts. Some are huge and influential, like the US Congressional Budget Office. Few have the same focus on costing election policies that applies in Australia.
Costs are a big deal here. Both parties have run advertisements attacking the other side on the question of whether their policies are affordable.
On major policies such as the Coalition plans for nuclear power there are massive differences between cost estimates put forward by each side. Such differences could be resolved by an independent and impartial costing. This is why Australian voters deserve to see such costings as soon as possible.
Authors: Stephen Bartos, Professor of Economics, University of Canberra
