Albanese insists fiscal stance ‘has not changed’ as government targets defense delays
Anthony Albanese insisted on Sunday that the government’s intention to deliver the Stage 3 tax cuts has not changed, while reinforcing the expectation of major spending cuts in this month’s budget to fight against “waste”.
Meanwhile, the government will flag at least 28 major defense projects on Monday that together are more than 97 years behind schedule as it highlights the pressures it faces on the budget. He says project management needs to be improved.
After a week of speculation that the Stage 3 cuts could be recalibrated and then suggestions on Sunday that there would be no change, Albanese said repeatedly at a press conference in Perth: “Our position has not changed.”
He denied any conflict with Treasurer Jim Chalmers, who has been pushing for changes to the tax cuts, which are due to begin in law in mid-2024. During the election campaign, Labor pledged to keep them. The tax cuts favor high earners and Labor has been highly critical of them when they were in opposition.
Albanese said the government was going through the budget “line by line, making sure we got rid of the waste.
“Labour will always present responsible budgets,” he said.
Defense is one of the areas Chalmers regularly cites when discussing budget pressures on spending. The others are elderly care, health, NDIS and debt interest payments.
Read more: Grattan Friday: Jim Chalmers plays the tease as he pushes to change Stage 3 tax cuts
Some 18 projects are over budget and there are at least $6.5 billion variances from approved estimates. Much of this is due to exchange rates and price indexation, the government says, but “they still have a real impact on the defense budget”.
The Coalition’s March budget estimated that defense spending as a share of GDP would rise from 2% in 2021-22 to 2.2% over the decade, reaching more than $80 billion a year by 2032. The government says this does not include future requirements not funded by the Coalition, including AUKUS and an increase in force size.
Overdue projects include: Hunter Class Frigates, Battlefield Transport Aircraft, Offshore Patrol Vessels, Advanced Cape Class Patrol Vessels, P-8A Poseidon Aircraft, Battlefield Command System and a series of defense satellite communications projects.
To strengthen the “defence projects of concern” process, the government says it
Establish an independent project and portfolio management office within Defense
Require monthly reports on Projects of Concern and Projects of Interest to the Minister of Defense Industry and Minister of Defense
Establish formal processes and “early warning” criteria for placing projects on the “Projects of Concern” and “Projects of Interest” lists.
Foster a culture in Defense of drawing attention to emerging issues and encouraging and enabling rapid response
Provide struggling projects with additional resources and skills
Convene regular ministerial summits to discuss remediation plans.
Blaming the former government for the blowouts in time and cost of the projects, Defense Minister Richard Marles said: “We are facing the most difficult circumstances since the Second World War, compounded by the fact that the economy faces serious pressures.
“Achieving record spending in Defense as a percentage of GDP means we need to be more responsible in how we manage.”