This week Prime Minister Kevin Rudd claimed to have found an accounting error amounting to what he called a $10-billion fraud in Coalition policy costings, arguing savings identified had been deliberately overstated.
He also released what he claimed were Treasury, Finance and Parliamentary Budget Office costing documents to support the point.
The heads of all three departments released statements saying they have at no stage costed Coalition policies.
In an unprecedented development in an election campaign, the head of Treasury Martin Parkinson and the head of the Finance Department David Tune have denied the Prime Minister's claim.
The independent Parliamentary Budget Office established by Labor has also distanced itself from the political stoush saying it is inappropriate and incorrect to claim that it had costed the policies.
Instead, they say they costed policy options provided by Labor.
Opposition Leader Tony Abbott says Kevin Rudd should now admit he's lied to the public.
"It was a slap in the face for the government. Mr Rudd's that there was some problem with our costings, problems with our figures has exploded in his face, and the point I make is that when it comes to costings, when it comes to Mr Rudd's statements about budgetary matters. As long as his lips are moving he is not telling the truth."
But Finance Minister Penny Wong is standing by Labor's claim.
Senator Wong says the submission was based on what the Opposition has said publicly, and if the assumptions are wrong, the Coalition should release the full details of its policies.
"Well what the Treasury and Finance has made clear is that they weren't asked to cost Coalition policies and that's because Tony Abbott won't give that to them. He won't give his policies to Treasury and for costing because he's hiding his costings. So the alternative Prime Minister is saying to the Australian people we don't actually want you to know the truth of of the cuts to come until as close to the election as possible."
Phil Bowen from the Parliamentary Budget Office says unless all of the policy specifications were identical, the financial implications of the policies could vary markedly.
Kevin Rudd says the media is misreporting the issue and Mr Abbott is committing fraud on the Australian people.
"I think the bottom line is this the fraud being perpetrated on the Australian people is by Mr Abbott refusing as of today to release to the Australian people full costing full cuts to the Australian people until it is too late on the eve on the election. That is not democratic, it is not open, and in fact perpetrates a continuing fraud on the Australian people."
The Coalition's education spokesman Christopher Pyne says Kevin Rudd is fooling himself.
"Yesterday, Kevin Rudd confidently went out and accused the Coalition of having a $10-million black hole. In the afternoon, the objective heads of the department said that was utterly false. Kevin Rudd's campaign is in tatters today and the Labor Party must be scratching their heads because this guy's completely off the reservation."
The Coalition says all of its policies were submitted for costing after Mr Rudd's claims this week and it will release all the details next week.
