Paul Kelly warns against the Labor way to even more dangerous debt: New Treasury secretary John Fraser put the numbers and reality on the table last week in his first speech. He shocked much of the conventional thinking.
Fraser said the figures showed Australia “has spent its way to a structural budget problem”. Revenue weakness was “only partly” to blame and Fraser argued “we cannot continue to finance recurrent expenditure by continuing to increase our debt"…
Labor has never conceded the weight of the problem lies on the spending side. The Senate majority, led by Labor and the Greens, has rejected a long list of spending restraints and refused to negotiate on most of them. The Parliamentary Budget Office has found measures blocked by the Senate constitute $112 billion in lost funds over a decade.
A Deloitte Access Economics analysis attached to the Business Council of Australia budget submission finds that over the past decade the origin of the budget blowout in policy terms is 80 per cent on the spending side versus 20 per cent on the tax cut side…
The irony is that action so far has been about higher taxes… Labor’s opening policy announcement on budget repair for the next election [is] to raise more tax from multinational corporations. Why should we be surprised? It is a guaranteed popular measure. The BCA recognises revenues will “normalise” to around 24 per cent of the GDP. But that cannot finance our spending programs. No way. The nation will still be living far beyond its means. The choice is apparent: we either become a significantly higher taxing nation or we follow the Treasury’s advice and tackle the expenditure side with a political culture still resistant to this option. Daily Telegraph editorial: Australia already has a rising tax burden, increasing by a full percentage point to 27.3 per cent in the last year alone — more than double the OECD average rise…
However, Australians’ current tax burden will seem like Christmas compared with what we can expect to pay if spending is not significantly reined in and the Budget does not go through some serious structural reform. One of those vital reforms is in Medicare, where costs are ballooning towards crisis point, and yet, thanks to the axing of the co-payment, another $1 billion hole has been blown in it.
