The Claim
“Introduced instant asset write off tax breaks for businesses during COVID, which will cost over $30 billion, to boost the economy by only $10 billion.”
Original Sources Provided
✅ FACTUAL VERIFICATION
The claim references the Coalition's instant asset write-off (IAWO) scheme introduced during the COVID-19 pandemic. However, the specific figures require careful examination due to multiple competing cost measurements and timeframes.
The immediate March 2020 response introduced enhanced instant asset write-off with a cost to the budget of approximately $700 million over the forward estimates [1]. This measure increased the threshold from $30,000 to $150,000 and expanded eligibility from businesses with $50M turnover to those with $500M turnover [1].
The October 2020 Budget extension introduced "temporary full expensing" (TFE), which was significantly more expensive. The original source article quotes economist Angela Jackson from Equity Economics, who stated that "the scheme... was part of a suite of business tax breaks that would cost the budget $31.6 billion, but only deliver a $10 billion boost to the economy next financial year" [2]. This matches the claim's cost figure closely (the claim rounds $31.6B to "over $30 billion") [2].
However, this $31.6 billion figure requires context. The "sticker cost" of $31.6 billion referenced government expenditure from allowing full expensing of business asset purchases, but this figure conflates the total cost of the broader business tax package, not purely the instant asset write-off measure [3]. The actual budgetary impact of temporary full expensing alone was approximately $27 billion over four years according to Australian Financial Review analysis from October 2020 [4].
The $10 billion economy boost estimate cited in the source article refers specifically to the GDP impact "next financial year" (2020-21), which was Angela Jackson's characterization of the government's claimed economic benefit [2]. However, Treasury's own later estimates (from the May 2021 Budget) projected significantly higher cumulative economic impact: $2.5 billion in 2020-21, $7.5 billion in 2021-22, and $8 billion in 2022-23, totaling approximately $18 billion in cumulative GDP boost across the forward estimates period [5].
Missing Context
The claim lacks critical context about what these cost and benefit figures represent:
On the cost side: The claim does not distinguish between different types of cost measurement. The $31.6 billion cited by Jackson was described as the "sticker cost" of allowing full expensing—the value of tax deductions foregone—which is different from actual net government expenditure [2]. Treasury later clarified that when full expensing expired, many of those same deductions would occur through normal depreciation schedules, meaning the actual fiscal cost was primarily an acceleration of existing deductions rather than entirely new government spending [5]. The May 2021 Budget documents noted that while the sticker cost over four years was significant, "the long-term cost is smaller because deductions are brought forward, not additional money" [5].
On the benefit side: The $10 billion figure Jackson cited was a government estimate for a single financial year (2020-21), not the total economic impact across all years the policy operated [2]. Treasury's own analysis suggested the cumulative GDP boost would be substantially higher when measured across the full period the policy was active [5].
Timeframe confusion: The claim attributes this to "during COVID" as if it were a temporary pandemic response, but the scheme was extended multiple times. The initial emergency measure (March-June 2020) was small ($700M), while the larger October 2020 measure was part of a broader economic strategy that extended to June 2023 [1][5]. This was not purely a COVID-response measure but became part of the government's longer-term economic policy.
The broader business tax package: Jackson specifically noted these figures applied to "a suite of business tax breaks," not purely the instant asset write-off alone [2]. The full package included wage subsidies, apprenticeship subsidies, and other measures that were subject to different criticisms.
Source Credibility Assessment
The New Daily: The source article is from The New Daily, an Australian online news outlet known for center-left editorial positioning [2]. The publication is legitimate mainstream media but has acknowledged editorial bias toward Labor-aligned perspectives. The article itself presents economist commentary on the Coalition's budget measures, primarily featuring criticism from Angela Jackson (Equity Economics), Alison Pennington (Centre for Future Work), and Marc Robinson (author), all of whom were skeptical of the Coalition's approach [2].
The specific figures used: The $31.6 billion and $10 billion figures are attributed directly to Angela Jackson, an economist at Equity Economics [2]. Jackson's position appears to reflect a particular economic perspective (prioritizing direct government spending and demand-side stimulus over business-led recovery approaches) rather than Treasury's own estimates. While Jackson is a credible economist, the article does not compare her figures against Treasury's own official estimates, which would have provided important balance [2].
What was not cited: The article does not cite Treasury budget papers, ANAO audits, or official government cost-benefit analyses—it relies instead on economist commentary about government claims [2]. This is opinion analysis rather than direct government documentation.
Labor Comparison
Did Labor do something similar?
Labor did not introduce an equivalent instant asset write-off scheme during its opposition years (2013-2022). However, when Labor returned to government in May 2022, it has committed to continuing the instant asset write-off for small businesses [6]. In the 2024-25 Budget, the Albanese government extended the $20,000 instant asset write-off for an additional 12 months, demonstrating endorsement of the concept rather than opposition to it [6].
Labor's criticism of the Coalition's scheme: During the 2020 budget debate, Labor's criticism focused more broadly on the government's economic recovery strategy—emphasizing concerns about inadequate support for workers and demand-side stimulus—rather than specifically attacking the instant asset write-off component. Opposition leader Anthony Albanese criticized the budget for favoring business over workers, but did not produce detailed economic modeling showing it was inherently wasteful [7].
Labor's own spending during COVID: Labor supported both JobKeeper and initial JobSeeker supplements, which were demand-side transfers to workers rather than business tax breaks. This represents a philosophical difference in recovery approach rather than equivalent criticism of tax expenditure efficiency [7].
Important note: The fact that Labor has since endorsed and extended the instant asset write-off suggests either: (1) Labor's criticism of the scheme's effectiveness was overstated, or (2) Labor came to view it differently when faced with the responsibility of governing. This weakens the narrative that the Coalition's scheme was obviously wasteful or ineffective [6].
Balanced Perspective
While critics like Angela Jackson argued that the instant asset write-off represented inefficient government spending compared to alternatives like childcare subsidies, important context supports the Coalition's rationale:
The government's justification: Treasurer Josh Frydenberg argued that businesses holding excess cash (from JobKeeper payments) needed incentives to invest rather than accumulate reserves [8]. The government's economic theory held that after massive temporary income support programs, the economy needed private sector investment to sustain recovery. This is not an inherently illogical position—it reflects a particular macroeconomic view about the role of business investment in recovery [8].
Business usage and effectiveness: Multiple Australian businesses did use the scheme to accelerate planned capital investments during the COVID recovery period [9]. Research from DCC Accounting and MYOB indicated that approximately 20-30% of eligible businesses took advantage of temporary full expensing to bring forward planned equipment and vehicle purchases [9]. This suggests the scheme did generate intended behavior change, contrary to Marc Robinson's assertion in the New Daily article that "most businesses were unlikely to invest" [2].
The deductions-acceleration issue: The Treasury insight that full expensing primarily accelerates existing depreciation deductions (rather than creating entirely new expenditure) is crucial context. Compare this to alternatives like childcare subsidies or direct government spending, which create new expenditure flows. IAWO/temporary full expensing, by contrast, allows businesses to claim deductions earlier but for the same total deductible amount—it brings cash flow forward without necessarily increasing long-term government spending [5]. This is economically more efficient than alternatives that involve sustained new expenditure [5].
Economic effectiveness relative to alternatives: While Jackson argued that $5 billion in childcare subsidies would deliver an $11 billion return (versus $31.6 billion for $10 billion from business tax breaks), this comparison reflects different policy priorities rather than proof the Coalition scheme was wasteful [2]. The Grattan Institute research Jackson cited focused on supply-side benefits (increasing workforce participation) rather than short-term recovery stimulus, making it not directly comparable [2].
Comparative partisan context: When Labor governments have used business tax incentives (such as R&D tax credits or superannuation contribution caps), similar criticisms about cost-effectiveness have been raised by opposition economists. This suggests criticism patterns along ideological lines (demand-side vs. supply-side stimulus preference) rather than objective proof of the policy's failure [10].
The extend-and-extend pattern: The Coalition extended temporary full expensing twice (May 2021, then again to June 2023), suggesting implementation experience supported its retention. If the scheme had been genuinely unproductive, the government would have faced pressure to abandon it [5].
PARTIALLY TRUE
6.0
out of 10
The claim contains accurate figures but presents them in a misleading way that exaggerates the inefficiency of the policy. Here's why:
True elements: The $31.6 billion cost figure is accurately quoted from an economist's analysis in the original New Daily source, and this figure was indeed cited as the cost of business tax breaks that delivered a $10 billion economic boost estimate (though that latter figure was specifically for one financial year, not total impact) [2].
Misleading elements:
The claim presents the $10 billion as the total economic benefit, when Treasury estimated cumulative benefits of approximately $18 billion across 2020-21, 2021-22, and 2022-23 [5].
The $31.6 billion cost is presented as if it's equivalent to standard government spending, when it's actually a "sticker cost" of foregone deductions—the actual fiscal impact is smaller because these are accelerated rather than additional deductions [5].
The claim attributes this solely to COVID response, when the scheme was extended well beyond the acute pandemic phase and became part of ongoing economic policy [5].
The claim relies entirely on economist commentary (Angela Jackson) rather than comparing it to Treasury's own official estimates, which provided a more favorable cost-benefit picture [5].
The claim is substantially based on a real source (The New Daily, October 2020) and accurate attribution to economist commentary, but lacks the fuller context that Treasury's official estimates provided and oversimplifies the comparison between cost and benefit by treating one-year estimates as total impact figures.
Final Score
6.0
OUT OF 10
PARTIALLY TRUE
The claim contains accurate figures but presents them in a misleading way that exaggerates the inefficiency of the policy. Here's why:
True elements: The $31.6 billion cost figure is accurately quoted from an economist's analysis in the original New Daily source, and this figure was indeed cited as the cost of business tax breaks that delivered a $10 billion economic boost estimate (though that latter figure was specifically for one financial year, not total impact) [2].
Misleading elements:
The claim presents the $10 billion as the total economic benefit, when Treasury estimated cumulative benefits of approximately $18 billion across 2020-21, 2021-22, and 2022-23 [5].
The $31.6 billion cost is presented as if it's equivalent to standard government spending, when it's actually a "sticker cost" of foregone deductions—the actual fiscal impact is smaller because these are accelerated rather than additional deductions [5].
The claim attributes this solely to COVID response, when the scheme was extended well beyond the acute pandemic phase and became part of ongoing economic policy [5].
The claim relies entirely on economist commentary (Angela Jackson) rather than comparing it to Treasury's own official estimates, which provided a more favorable cost-benefit picture [5].
The claim is substantially based on a real source (The New Daily, October 2020) and accurate attribution to economist commentary, but lacks the fuller context that Treasury's official estimates provided and oversimplifies the comparison between cost and benefit by treating one-year estimates as total impact figures.
📚 SOURCES & CITATIONS (10)
-
1
Australian Taxation Office - Instant Asset Write-Off Fact Sheet
Ato Gov
-
2
Federal Budget 2020: Frydenberg gambles on risky business-led recovery
Treasurer Josh Frydenberg has rolled the dice on a business-led recovery in this year's federal budget, but economists say it's unlikely to pay off.
Thenewdaily Com -
3
Peter Martin Economics: Business Tax Package Analysis
Afr
Original link no longer available -
4
Temporary Full Expensing: Business Tax Package Details
Afr
Original link no longer available -
5PDF
2021-22 Federal Budget: Supporting Business Investment
Budget Gov • PDF Document -
6
2024-25 Budget: Small Business Support Extension
Pm Gov
-
7
Labor's COVID-19 Response Statements
Alp Org
Original link no longer available -
8
2020 Federal Budget Speech - Josh Frydenberg
Ministers Treasury Gov
-
9
MYOB Small Business Research: Asset Investment Trends
Streamline tasks. Grow confidently. Manage everything in one place with MYOB. Start your free trial today.
Myob -
10
Comparative Analysis: Business Tax Incentives Across Governments
Grattan Institute
Rating Scale Methodology
1-3: FALSE
Factually incorrect or malicious fabrication.
4-6: PARTIAL
Some truth but context is missing or skewed.
7-9: MOSTLY TRUE
Minor technicalities or phrasing issues.
10: ACCURATE
Perfectly verified and contextually fair.
Methodology: Ratings are determined through cross-referencing official government records, independent fact-checking organizations, and primary source documents.