Illustration: Matt Golding
The move would also trigger a fresh GST funding war with the states, after Mr Dutton vowed last month that no state would be worse off under a Coalition government.
Treasurer Scott Morrison said Mr Dutton’s GST plan was an “absolute budget blower” and could cost $7.5 billion over the next four years alone.
“Any change to the GST has to be agreed by all states and territories and I’m sure that they would say – well, if you want to do it, that’s fine, send us $7.5 billion,” said Mr Morrison, who declared support for Prime Minister Malcolm Turnbull on Wednesday.
Liberal MP Craig Kelly, an ally of Mr Dutton, also hosed down the plan, claiming it could only be afforded for one three-month period.
Mr Dutton, a former assistant treasurer, has not made budget repair a priority since setting his eyes on the leadership, but the task of getting it back to balance could suffer a billion dollar hit under his plans to cut the immigration rate.
Slashing the intake from 190,000 to 162,000 people will cost the budget more than $500 million this year, according to a Treasury briefing obtained by Fairfax Media.
Mr Dutton said he would cut that even further if he secured the top job. He did not respond to requests for an exact figure when asked about his economic priorities.
A 50,000 reduction in the intake would hit income tax revenues by $1 billion a year, effectively eliminating the wafer thin surplus of $2.2 billion projected in 2019-20.
Despite the revenue hits, the former home affairs minister has pledged to outspend the Turnbull government on social services.
“We need to invest record amounts into health, education and aged care, ” he told 3AW.
Economists have lashed the policy platform, warning a sharp cut in the immigration rate could hurt a falling housing market and economic growth, an energy royal commission was unnecessary and tinkering with the GST was just “bad policy.”
“It makes it more complex, is costly to administer and is regressive. You’re giving wealthy households discounts while those on lower incomes are struggling to pay their bills,” said Deloitte Access economics partner Nicki Hutley.
PwC tax partner Paul Abbey warned the solution to power price challenges is not changes to GST.
“We cannot destroy the GST revenue base with a constant stream of exclusions and cuts,” he said.
Business has been struggling to keep up with the unfolding events, warning Australia’s economy was being put at risk by “piecemeal reform” according to the Australian Chamber of Commerce and Industry.
Confidence has been smashed after the government’s top economic policies, the National Energy Guarantee and company tax cuts were effectively killed off in Canberra.
“It’s difficult to make long-term investment decisions if the government doesn’t have long-term policies,” said shadow assistant treasurer Andrew Leigh.
Mr Dutton has also set his eyes on a royal commission into the energy sector to investigate years of price hikes for consumers.
Resources Minister Matt Canavan the idea was “not the policy of the government,” but that he welcomed contributions from the backbench.
Eryk Bagshaw is an economics reporter for the Sydney Morning Herald and The Age, based in Parliament House
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