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Independent Budget Impact Assessment of the 2018 General Election Policies │ Liberal and National Parties Victoria Available Under CC BY-NC-ND 3.0 Australia Independent budget impact assessment of the 2018 general election policies Liberal and National Parties Victoria pbo.vic.gov.au FINAL January 2019 Parliamentary Budget Office Postal address Parliament House Spring Street East Melbourne Australia 3002 Telephone +613 8682 2699 Email [email protected] Online pbo.vic.gov.au © The State of Victoria (Parliamentary Budget Office) 2019. The Victorian Government supports and encourages the dissemination of its information. The copyright in this publication is licensed under a Creative Commons Attribution-Non Commercial-No Derivatives (CC BY-NC-ND) 3.0 Australia licence. To view this licence visit https://creativecommons.org/licenses/by-nc-nd/3.0/au/ Under this licence you are free, without having to seek permission from the Parliamentary Budget Office, to use this publication in accordance with the licence terms. For permissions beyond the scope of this licence contact [email protected] Content from this work should be attributed as: The State of Victoria (Parliamentary Budget Office), Independent budget impact assessment of the 2018 general election policies │ Liberal and National Parties Victoria available under CC BY-NC-ND 3.0 Australia Contents At a glance .................................................................................................................................. 1 Introduction ................................................................................................................................ 2 Purpose ............................................................................................................................ 2 Basis of comparison .......................................................................................................... 2 Election policies ......................................................................................................................... 3 Summary .......................................................................................................................... 3 Analysis ............................................................................................................................ 4 Budget impact ............................................................................................................................ 5 Summary .......................................................................................................................... 5 Analysis ............................................................................................................................ 6 Supplementary information ..................................................................................................... 12 Report suite..................................................................................................................... 12 Existing costings ............................................................................................................. 12 Judgements .................................................................................................................... 12 Sufficiency of information ................................................................................................ 13 Application of accounting standards ............................................................................... 13 Appendix A — Election policies within scope ....................................................................... 14 Appendix B — Medium term aggregate impacts ................................................................... 33 Appendix C — Standard assumptions ................................................................................... 34 Independent budget impact assessment of the 2018 general election policies At a glance Compared with the latest published Victorian state budget, the Liberal and National Parties’ 432 policies publicly announced in the lead up to the 2018 Victorian state general election would have the following independently estimated aggregate impact if implemented: CHANGE IN NET POSITION ($ million) Total to 2021-22 1 687 2018-19 2019-20 2020-21 2021-22 -8 4 760 -1 737 -1 328 Net debt level ($ million) Net debt as a proportion of nominal These policies would result in a decrease in GSP at 30 June 2022 would decrease aggregate net debt at 30 June 2022 from 31 768 to: from 6.0 per cent to: 30 081 5.7 per cent 30 June 2019 30 June 2020 30 June 2021 30 June 2022 22 521 23 062 27 308 30 081 Budget impact by function of government (number of policies and change in net position to 2021-22) 23 General public services 85 Public order and safety 55 Economic affairs 14 Environmental protection 17 Housing and community amenities 41 Health 53 Recreation culture and religion 21 Education 31 Social protection 92 Transport -8 000 -6 000 -4 000 -2 000 0 2 000 4 000 6 000 Change in net position ($ million) Interest and Depreciation and Financial leases Draw down on depreciation non-cash contingency adjustments reserves 170 108 — 5 289 Source: Parliamentary Budget Office. 1 Parliamentary Budget Office Liberal and National Parties Victoria Introduction The Parliamentary Budget Officer—an officer of the Victorian Parliament and the Chief Executive of the Parliamentary Budget Office (PBO)—is independent of both the government of the day and political parties. The Officer has a legislative mandate to provide independent advice to all members of Parliament, with complete discretion in performing and exercising duties, functions and powers of the office. Within two months after each general election, the Officer prepares and publicly releases a report on the budget impact of policies that political parties publicly announced before the date of the general election. More information about the PBO is available at pbo.vic.gov.au, including a glossary of key terms used in this report (pbo.vic.gov.au/glossary of terms). Purpose The purpose of a post-election report is to increase transparency to the community about the budget impact of election policies announced by political parties. This report includes election policies announced by the Liberal Party of Australia (Victorian Division) and the National Party of Australia – Victoria (LNP) from 1 May 2018 to the general election on 24 November 2018. It considers the budget impacts of each policy and their interactions. In preparing this report, the Officer, with the support of the PBO, examined each policy, gathered information, developed financial models, applied conservative assumptions and made judgements to estimate the impact to the latest state budget. Broader impacts to the state economy and community are outside the scope of this report. Basis of comparison The budget impact of election policies in this report reflects the difference between two options: . A base case—the most recent budget update released by the state government under Part 5 of the Financial Management Act 1994 (Victoria), which is the Department of Treasury and Finance’s half year budget update released on 10 December 2018. An alternative scenario—the implementation of election policies announced by the LNP. Budget impact information is provided for 2018-19 to 2021-22, in line with the base case, and is extended to 2028-29 to enable a better understanding of the impact of policies with medium term implementation or behavioural effects. Contingency reserve The base case includes a contingency reserve established by government for future expenditure that is not yet allocated to specific public sector departments. The contingency reserve includes provisions for: . future cost pressures . growth in future demand for government services . items not yet formalised at the time of budget paper publication . new initiatives for future budgets . urgent and unforeseen events. The total value of the contingency reserve included in the base case is $10 341 million for operating expenses and $9 682 million for asset investment. Parliamentary Budget Office 2 Independent budget impact assessment of the 2018 general election policies Election policies Summary The LNP publicly released 432 election policies for the 2018 state general election. Figure 1 shows the distribution of these policies across the functions of government. Each policy is also categorised by the costing component that is largest for that policy—revenue, operating expense, asset investment, or no impact to the budget. Figure 1: Number of LNP policies by function of government 100 90 80 70 60 50 Number of policies of Number 40 30 20 10 0 Revenue Operating expense Asset investment No impact Source: Parliamentary Budget Office. Note: Functions of government classifications were sourced from the Australian System of Government Finance Statistics; Concepts, Sources and Methods, Australia, ABS 5514.0, December 2015. Appendix A provides a description of each policy, contains a link to its public announcement, and assigns a unique identification number (ID) as a reference for use within this report. 3 Parliamentary Budget Office Liberal and National Parties Victoria Analysis The LNP publicly released election policies across all functions of government, however the following four functions had proportionally more policies announced: Transport . Road transport makes up around 50 per cent of policies, particularly to build and upgrade major roads. Around 30 per cent of policies relate to railway transport, particularly to upgrade and extend existing rail lines. Public order and safety . Around 30 per cent of policies relate to law courts, particularly
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