Federal Politics

Turnbull government could save $350m by scrapping taxpayer support for religion

The Turnbull government could improve the budget bottom line by $350 million by scrapping taxpayer support for religious organisations.

The Parliamentary Budget Office has found the government could raise an extra $390 million over the forward estimates by scrapping tax concessions for religious organisations, although about $100 million would go to the states as GST.

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It could also save $60 million by ending support for the controversial National School Chaplaincy Program.

The research was done for libertarian crossbench senator David Leyonhjelm, who says the government should consider the move.

Releasing the costings to coincide with the Easter weekend, Senator Leyonhjelm said while Christianity has made a significant contribution to liberal democratic values, taxpayers should not have to pick up the tab.

"The Liberal Democrats are not opposed to religion but we oppose government support of religion," he said. "It is a private matter."

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The independent budget office says scrapping fringe benefit tax concessions for religious employees would improve the underlying cash balance of the federal budget by $290 million over the forward estimates. Abolishing the GST-free status for sales of religious services would raise $100 million, which would go to the states.

However, the PBO cautioned that the figures should be considered "very low reliability".

"They have been estimated based on a range of assumptions and do not include the implications for some unquantifiable elements of the proposal," it said. "The estimates are sensitive to these assumptions, such as changes in the income and number of individuals eligible for the tax exemptions."

Abolishing the chaplaincy program would save $60.6 million in payments to the states and $300,000 in departmental costs.

The Abbott government committed $240 million to the program in its first budget, despite a commission of audit recommendation that it be abolished.

The Commonwealth originally funded the program directly but that arrangement was ruled unconstitutional by the High Court in 2014. The government subsequently reached a new agreement with the states to keep the program going.

The program has cost taxpayers more than $500 million since it was first introduced by the Howard government in 2006 but currently has bipartisan support.

Critics of the program hope Prime Minister Malcolm Turnbull, who is less overtly religious than his predecessor Tony Abbott, will scrap the program as part of his savings drive. But that appears unlikely given his apparent reluctance to anger his party's Christian conservatives.

The federal budget will be delivered on May 3 after being brought forward a week to pave the way for a likely double dissolution election.

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