![Treasurer Joe Hockey and Finance Minister Senator Mathias Cormann address the media during a press conference at Parliament House.](http://web.archive.org./web/20131028001759im_/http://images.smh.com.au/2013/10/26/4863582/Dan-20131026192441327555-620x349.jpg)
Federal Treasurer Joe Hockey and Finance Minister Senator Mathias Cormann address the media during a press conference at Parliament House. Photo: Alex Ellinghausen
Many of the official costings the federal government has used to justify its budget-tightening credentials are unreliable.
The Parliamentary Budget Office has estimated the budget impacts of a range of government policies, and says billions of dollars it has identified in government savings are only of a ''low'' or ''medium'' reliability.
The office does not assess the policies themselves, but their budget impacts, based on available information. Last Friday, Treasurer Joe Hockey hailed new post-election analysis by the budget office of government policies and their likely costs, which found the Coalition would improve the budget bottom line by $7.1 billion - $1 billion better than the Coalition forecast before the election.
Five days later, Mr Hockey responded to Australia's ballooning credit card bill by almost doubling the borrowing limit to half a trillion dollars. But buried deep in the report are revelations that many of the budget office's costings of Coalition policies are of a ''low'' or ''medium'' reliability. These include costings for the paid parental leave scheme, about $4 billion worth of savings proposed to offset the non-collection of the carbon tax, and the estimated $5.2 billion saving from cutting the public service by 12,000.
The budget office says other policies will have significant long-term adverse budget implications, increasing costs and reducing revenue.
On Friday, a spokesman for Mr Hockey said: ''The Treasurer has full confidence in the Parliamentary Budget Office costings. ''The assessment of the PBO of the reliability of costings is in no way intended to signal the costings are incorrect.
''It is simply an acknowledgment by the PBO that some costings are more difficult than others and are dependent on assumptions and the quality of available data.''
The budget office says its estimate of the cost of the paid parental leave scheme is only of low-to-medium reliability because it is subject to several assumptions, including working women's fertility rates, female labour force participation, the wages parents earn and the amount of leave parents take after the birth of their children.
The decision to increase the indexation rate for Defence Force benefits, while it initially appears cheap (costing only $58.1 million over the forward estimates period) will increase Commonwealth unfunded liabilities by $4 billion from July 1, the budget office says.
The office says its estimate that cutting the public service by 12,000 will save $5.2 billion over four years is of ''low to medium'' reliability.
To achieve the projected savings, the government will need to tightly constrain hiring of new staff and not renew contracts of temporary staff, while avoiding additional redundancy payouts.
The savings measures the office ranks as low reliability include:
■Discontinuing business compensation measures in the Clean Energy Future Fund, saving $1 billion over four years. It says the savings are dependent on the government's ability to recover funding that has been contractually committed.
■The $300 million saving from discontinuing land initiatives and bureaucracies established under the Clean Energy Future package, and $775 million in savings from abolishing carbon tax measures.
The office says the long-term budget situation will also be significantly damaged by the abolition of the carbon tax and the mining tax, which will reduce revenue beyond the forward estimates, while the government's paid parental leave scheme will have a continuing impact, by increasing expenditure.