$118b over 10 years: One Nation’s uncosted migration policy costed
A respected economist has estimated One Nation’s approach to migration would cost Australia $118 billion over a decade, after the party failed to get the economic consequences of its headline policy analysed.
Pauline Hanson and treasury spokesperson Barnaby Joyce have released major policies on migration, superannuation and tobacco this month without requesting the Parliamentary Budget Office (PBO) to assess and model their financial impact.
One Nation has proposed three significant policies, but hasn’t had any of them costed. Alex Ellinghausen
This is despite the service being free and available to all parliamentarians, to level the playing field for minor parties and independents who would otherwise not have access to the government’s level of analysis.
Independent economist Saul Eslake mused that “perhaps that’s because the PBO is staffed by economists, and as we know, One Nation hates economists”.
Nine.com.au contacted One Nation for comment but did not receive a response by deadline.
Hanson previously said she would be willing to have her migration policy costed by the PBO but was sceptical about its findings.
“Did they get it right with the Snowy 2.0 scheme? Did they get it right with NBN? Did they get it right with Inland Rail?” she told News24.
“All these things that they’ve all budgeted for this and it’s always been a blowout.”
A spokesperson for Treasurer Jim Chalmers said One Nation’s policies were reckless and would attack the wellbeing and wages of workers.
In lieu of any formal analysis, here is a breakdown of what One Nation’s three recent policy announcements are estimated to cost the budget and taxpayers.
Migration cut
One Nation would reduce migration by 750,000 people over three years, creating a negative net overseas migration figure during that time.
The target is five times higher than the Coalition’s plan to reduce migration at the last election, which the PBO estimated would worsen Australia’s debt by $3.4 billion over the four years to 2028-29 and $23.6 billion over the decade to 2035-36.
With those figures, Eslake estimates One Nation’s plan would cost the budget $17 billion over the first four years, and $118 billion over the first decade.
Eslake said that while the total cost may end up being less than that, it would undoubtedly be substantial.
“Of course the PBO’s costings don’t make any allowance for the impact of any cut in immigration on economic activity more broadly... since reduced spending by a smaller number of migrants would inevitably entail job losses for people already in Australia, who would then be paying less tax and drawing on unemployment benefits and other social services,” he said.
Shadow treasurer Tim Wilson told nine.com.au that “No one knows how much One Nation’s back-of-the-napkin immigration policy will force up income tax, including One Nation.”
Industry leaders, like Business Council Australia chief executive Bran Black and National Farmers Federation president Hamish McIntyre, warned that the plan could leave them without the labour they desperately need and cause a recession.
Industry voices have raised concerns about cutting migration. Getty Images
Early super access
One Nation would allow workers to access 3 per cent of their compulsory super contributions for up to three years with no eligibility requirements or stringent guardrails to prevent the money from being misused.
Eslake said that allowing a large portion of the population to have about $2300 more per year would add to demand for goods and services, which would put upward pressure on prices.
“Which would be contrary to the Reserve Bank’s efforts to bring aggregate demand for goods and services into line with aggregate supply in order to get inflation back down into its 2 to 3 per cent target band,” he said.
“That in turn would make it more likely that the RBA will raise interest rates, or raise them by more than they would otherwise.”
At the time of the announcement, Hanson denied potentially allowing millions of people to access a portion of their super early would flood the economy and drive up inflation.
“It’s neutral,” she said.
“It will affect 7 million people that will be open to taking their super out, so it won’t be inflationary.”
The financial cost of the super policy is estimated to be greater over the long term as Australians stand to lose thousands more in forgone income compounded over the course of their working life.
“Over the longer term, people who availed themselves of One Nation’s proposal would have smaller superannuation balances upon retirement, and hence would be more likely to fall back on the age pension in whole or in part, so that the long-run impact on the budget would probably be negative,” Eslake said.
The Super Members Council estimated the median full-time worker would $25,000 poorer at the time of retirement.
That figure is doubled for a couple.
It costed the policy itself and found the median full-time worker earning $90,500 taking out a portion of their super over the three years would cost taxpayers an extra $14,000 in age pension.
For each dollar of super taken out, taxpayers would have to pay an extra $2.02 for the age pension.
The Super Members Council estimated the median full-time worker would $25,000 poorer at the time of retirement under One Nation’s super changes. Getty
Tobacco excise cut
One Nation would cut the tobacco excise by 75 per cent and pause indexation for three years to combat the surging black market, which has been blamed for fatal firebombings and arson attacks across the country.
The Coalition has similarly proposed cutting the excise by 80 per cent after the illicit tobacco trade caused tax revenue to fall by more than $10 billion a year.
Once again, using the PBO modelling on the Coalition’s plan, Eslake said it would actually increase tax revenue by at least $8 billion over the first four years.
But he warned the figure was based on the “highly speculative” assumption that smokers would return to the legal market en masse.
“It could well be that the reduction in the excise proposed by One Nation would result in a reduction in revenue, and hence an increase in the budget deficit, if smokers continued to buy their cigarettes on the now well-established black market,” he said.
There is an argument for cutting the tobacco excise, with some economists like Chris Richardson and Richard Holden calling for the excise to be drastically reduced, even scrapped altogether, to kill the black market and associated crime.
But health bodies have raised concerns about outcompeting the black market and encouraging an increase in smoking rates.
Australian Council on Smoking and Health chief executive Laura Hunter said no government can price match organised crime that makes a pack of cigarettes for 28 cents.
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