Thinktank says economic effects of $48bn 10-year program of company tax cuts could be negative in short term

Malcolm Turnbull’s jobs and growth plan will boost national income by 0.6% at most and that benefit will take decades to happen, according to a leading economist.

A day after the Coalition accused Labor of “lying” about the economic benefits of its education spending, it stands accused of overstating the economic benefits of its $48bn 10-year program of company tax cuts – the centrepiece of Turnbull’s budget and its election campaign.

The finance minister, Mathias Cormann, told Guardian Australia on Thursday the tax cuts would “would increase the economy by more than 1% over the medium term or long term so that is 10 or 20 years … it will help increase the size of the economy by more than 1% over a 20 year period.”

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That figure is based on a Treasury paper, released on budget night, but John Daley, the chief executive of the Grattan Institute, said the real economic impact suggested by the paper was “0.6% ... at most” over 20 years or more.

The government was referring to the increase in gross domestic product – the total output of the economy – found by the Treasury modelling to be 1% under the most realistic scenario considered.

But Daley said the Grattan Institute the measure of gross national income (GNI) was more relevant because it excluded the benefits the tax cuts would provide for foreign companies flowing overseas.

And the increase in GNI, according to the realistic scenario in the modelling, was 0.6% and, in the short term, Daley said, the economic effect could be negative.

“When foreign corporations pay less tax, that flows straight out of the economy from day one, although it might be gradually offset by additional investment over time,” he said.

The modelling looked at different scenarios by which governments could restore the income lost by the company tax cuts but, according to Daley, “0.6% is the highest it could possibly be” and it would take 25 years for the economy to feel the full benefit.

The assessment of the growth benefits of the tax plan came as Cormann accused the Labor leader, Bill Shorten, of “lying” about the benefits of his proposed $37.4bn school funding plan, which he said would boost the economy immediately by 2.8% if implemented.

“There will be a 2.8% ­improvement straight away if we implement these changes and, over the longer term, 11%­ improvement to our GDP,” Shorten said.

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Shorten was citing a report by the Organisation for Economic Co-operation and Development from 2015 – Universal Basic Skills – which estimated the economic gains to Australia if every child was attending secondary school and had acquired basic skills by 2030.

But the report shows the value of future improvements in the economy from a real boost in educational outcomes to be worth 2.8% of GDP, in today’s dollars, by 2095. It also estimates the economy would be 11% larger in 2095 as a consequence. Shorten suggested the benefit could happen straight away.

On Thursday Shorten said the OECD had been observing that “if every adult in the workforce now had received the sort of quality education which we are outlining will be our promise in the future, we would have a lift in economic performance right now” and said no one could suggest that improved funding would not improve education outcomes.

Asked about the economic benefits of his package this week, Turnbull said: “It is well understood and well accepted that if you reduce the level of business taxes, company taxes, then you will get a better return on investment, you will see more investment and you will see more employment and that is the inevitable consequence of it.”