Peter Dutton’s budget reply Speech is full of distortions and many of the key polices are flawed or we cannot be sure they will work as intended. The Labor Party might be criticised as too cautious, but the Coalition is clearly not ready for government.

On Tuesday, the Treasurer in his budget speech detailed Labor’s policies and provided costings for them going forward. Except for the income tax cuts, there were no real surprises. Almost all Labor’s policies had been already announced prior to the Budget.

In contrast, prior to the budget there was some criticism of Opposition Leader Peter Dutton for the paucity of Coalition policy announcements. Further, to the extent that the Coalition did announce policies, frequently in areas such as health, it was limited to saying that they supported what Labor had just announced.

So Dutton’s budget reply speech on Thursday night was more than usually important. There was an expectation that he needed to use this occasion to define more specifically what a Coalition Government would be offering if it wins the forthcoming election.

To my mind, Dutton’s speech was characterized by lots of assertions about the record of the Albanese Government, many of them debatable, and some clearly wrong (see more below). Dutton’s speech reminded me of his performance during the referendum campaign for the Aboriginal Voice to Parliament when he similarly made claims that were not true and for which he provided no supporting evidence.

Nevertheless, Dutton did identify the following policy areas where he would like us to believe that the Coalition will deliver better outcomes:

• Cost of living relief through by reducing petrol excise for one year.
• Cheaper energy prices over time
• Better access to housing by reducing the migration intake.
• Better economic management.

The credibility of these policy initiatives will be discussed below.

Cost of living relief through lower petrol prices

The Coalition has promised to halve the fuel excise for 12 months and then review it. Dutton claims that for a household with one car, filling up once a week, that’s a saving of $14 per week on average, with twice that saving for a two-car family.

To pay for this policy the Coalition proposes to repeal Labor’s income tax cuts that are worth up to $268 in the first year and $536 in the second. That represents a saving of a bit over $20 per week by the second year.

Dutton invites us to agree that his assistance is better. But as the two forms of cost of assistance come at much the same cost, that effectively means that while some people will gain more from the fuel excise cut, more families will gain less.

Those who gain most are more likely to be “tradies” whom Dutton is clearly targeting for their support, while those who gain less from the excise cut are those who don’t have a car or use it less.

In addition, it is questionable whether cutting the fuel excise charge is good policy. The fuel excise in Australia is much lower than in most other OECD countries, and arguably motorists should pay for their use of roads and the environmental damage they contribute to. Indeed, it is likely that the reason why Australians buy bigger cars and are less likely to buy electric cars is at least partly due to the low petrol excise.

Cheaper energy prices

In an unusual innovation for a conservative political party, Dutton in his budget reply speech proposed to decouple gas sold on the domestic market from overseas prices. As much as 20% of Australian-produced gas that would otherwise be exported will be reserved for the domestic market, although Dutton has pledged that existing overseas contracts will not be broken. To get this extra gas to the domestic market, the Coalition also plans to invest $1 billion to increase gas pipelines and storage capacity.

Dutton asserted that these initiatives would drive down wholesale domestic gas prices from around $14 per gigajoule to under $10 per gigajoule, possibly as soon as the end of the year.

In addition, the Coalition is committed to a major expansion of nuclear energy, which they have had costed as being 44% cheaper than Labor’s plan which relies heavily on the expansion of renewable energy supported by a limited reliance on gas for firming purposes.

Frankly, the Coalition’s energy policies must continue to be doubted. First, gas is an expensive form of energy and that is why coal-fired power has been preferred where it is available. And neither gas nor coal are competitive with renewable power.

Equally, all the experts have disputed the Coalition’s costings for nuclear power. Most recently a report by the Clean Energy Investor Group found that without wind, solar and battery storage, Australian households and businesses would have faced wholesale electricity prices up to between $30/MWH and $80/MWH higher than they were last year and paid an estimated $155 to $417 more for household electricity bills.

Further, this lower cost will continue to grow as the investment in renewable energy continues. Indeed, the rest of the world understands this, and the CEIG report found that in 2023 almost 91% of new global electricity capacity came from solar and wind.

The Coalition’s obsession with gas is most probably because they need to fill the gap as coal-fired power stations close well before nuclear energy becomes available.

Better housing and reducing the migrant intake

Dutton has long been critical of migration levels under the Labor Government, although much of the surge in Labor’s first two years was in response to the re-opening of the borders after COVID. For Dutton, the increase in housing prices has largely been in response to excessive population growth, even though Australia’s population is still below the level Treasury predicted pre-COVID during the Morrison Government years for 2024-25.

In his budget reply speech, Dutton said he would cut the permanent migration program by 25%, ban foreign investors and temporary residents from purchasing existing Australian residences for a period of two years, and set stricter caps on foreign students.

However, no detail is available on how he will reduce permanent migration. Also, the Coalition opposed the caps on foreign students when they were proposed by the Labor Government, and any such caps risk further damaging the funding of universities.

Equally important, the increase in dwelling prices mainly reflects an inadequate supply, largely as a result of zoning restrictions limiting the supply of dwellings where people want to live. State Labor governments are now starting to tackle this problem, but the main opposition comes from NIMBYs who are frequently Coalition supporters.

The Coalition has previously announced that it will allow aspiring first home owners to borrow from their superannuation funds, but unless the supply of housing improves that only risks pushing up the prices of dwellings further.

Better economic management

It is part of the Coalition mantra that they are always better economic managers than Labor.

In his speech, Dutton was critical of budget “deficits as far as the eye can see”, and he claimed that “over three years, the Albanese Government has increased spending as a share of the economy more than any government since the recession of the early 1990s".

First, a few fact-checks. As in almost all advanced economies, budget deficits are the norm in Australia, including under Coalition Governments. Indeed, during the pre-COVID years of the Abbott, Turnbull and Morrison Governments from 2013-14 to 2018-19, they never ran a budget surplus, and their average deficit represented 1.7% of GDP. This is significantly more than for the deficits projected since the Albanese Government came to power where the budget balance already recorded since 2022-23 and projected out to 2028-29 averages a deficit of only 0.6% of GDP.

In addition, over these same seven years from 2022-23 to 2028-29, real government outlays under the Albanese Government are projected to average only 1.7% annual growth. This is about half the 30-year average, and arguably the Albanese Government needed to repair the underfunding of essential services under the previous Coalition Governments.

Second, unlike Labor, Dutton is yet to be forthcoming with the costings for his own election policies.

The excise cut will be paid for by abolishing Labor’s income tax cut. But Dutton is promising major investments in nuclear energy and gas pipelines, and while he argues that there will be savings from less investment in power lines to transmit renewable energy, realistically the Coalition’s energy policies will cost quite a lot more.

Dutton also promised additional spending on a number of new items, including $50 million for food charities, increasing the instant asset write-off under the income tax from $1000 to $30,000, providing small and medium businesses with $12,000 to support them hiring new apprentices and trainees, lowering the pharmaceutical benefits co-payment to $25, investing $500 million in women’s health and investing an additional $400 million in youth health services.

While many people would support these initiatives, Dutton has provided no information about how they will be paid for. In addition, he has stated that “we will continue to invest in essential services and critical areas of the economy – like health, aged care, veterans support, the NDIS, indigenous affairs, child care and defence".

So how can we expect the Coalition to find the savings necessary to pay for their policy agenda? The answer is that there are almost no such savings.

In his speech, Dutton said the Coalition would end the $20 billion Rewiring the Nation Fund, stop the $10 billion Housing Australia Future Fund, and scrap the nearly $14 billion of production tax credits for green hydrogen. The problem, however, is that even if these so-called savings were a good idea, they will not reduce Dutton’s budget deficit. The savings from rewiring the nation will be spent on gas pipelines, and the other funds to be saved are not part of the budget.

That leaves only Dutton’s alleged savings by reversing “Labor’s increase of 41,000 Canberra-based public servants". But that too is another deception. In fact, less than a quarter of these additional 41,000 public servants are based in Canberra. Most are employed providing essential services in local areas. But Dutton promised in his speech that, “We won’t cut frontline service delivery roles". In short, savings from reducing the public service would at most only add up to an insignificant $1 billion a year.

Conclusion

In sum, Dutton’s budget reply speech is full of distortions and is often factually wrong. There is every reason to conclude that the Coalition is not yet fit for government as it does not have a coherent economic strategy to deal with the key problems facing Australia today.