29/05/2014 - 05:30

One way or another, we’re going to pay

29/05/2014 - 05:30


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For all its much-criticised cuts the federal budget fails to address the core issue of spending.

One way or another, we’re going to pay
UNCERTAINTY: Changes to the tertiary education funding model are among the many unpopular measures in the federal budget.

The only surprise since the tabling of the federal budget is that no-one labelled it the ‘Humpty Dumpty budget’, since coalition polling slumped so

markedly following widespread opposition to many of its policy decisions.

The uproar prompted one insightful editorialist to claim the ‘great fall’ was due to the fact that “governments spend much more than Australian voters are prepared to pay in taxes”.

That snappy one-liner, if not the full explanation, certainly goes a long way to clarifying the quizzical relationship between the readiness to take, and resistance to being taxed.

It also helps explain why Kevin Rudd, who just seven years ago – then affectionately known as Kevin 07 –registered an approval rating up to 70 per cent.

Remember those years of Canberra largesse?

Subsidised roof top solar panels, taxpayer-funded ceiling insulation, school halls across the land.

One could go on … cash for clunkers, black boxes on TV sets, and so much more.

More worrying now, however, is the fact that Labor in 2014, led by former Australian Workers Union chief Bill Shorten, is hell-bent on continuing to promote the take-take-take mentality.

Little wonder another insightful observer defined Mr Shorten, following his budget response, thus: “We have an opposition leader willing to sacrifice the economy for the good of his career”.

So, even though Julia Gillard fled the national scene at the last election, and Mr Rudd followed soon after with a tearful parliamentary address, their spirit lives on within Shorten-led Labor.

Vote buying with others’ money is set to continue, when precisely the opposite is needed.

What’s equally concerning is that the architects of the budget, despite having attracted so much invective from predictable quarters, failed to reverse the trend towards ever bigger government, meaning more dollars will continue flowing to Canberra, instead of into people’s bank accounts.

Take the following assessments by two of the country’s leading budget assessors, Robert Carling of the Sydney-based Centre for Independent Studies, and Chris Berg of Melbourne’s Institute of Public Affairs.

Carling casts aside all the spin about Mr Hockey having ended the age of entitlement in the budget.

Quite the contrary.

“For all its rhetorical emphasis on expenditure restraint, the 2014-15 budget in fact relies heavily on revenue to reach approximate balance in four years’ time,” he said.

“Total annual revenue is up by a very robust 29 per cent over those four years.

“This largely takes the form of automatic revenue growth (including personal income tax bracket creep) which always occurs when the economy is growing.

“The fiscal experts who keep telling us the budget is in strife because there isn’t enough revenue should throw away their song-sheet.

“Revenue is set to grow faster than the economy, thereby lifting its share from 23 per cent to 25 per cent.”

Berg is equally scathing and, like Carling, highlights key numbers.

“For all the fire and brimstone that accompanied last week’s commentary on the budget, the bottom line is simple: under the coalition, government spending is going up, not down,” he said.

“While this year the government will collect $363 billion, by 2017-18 it plans to collect $467 billion.

“That’s a jump in the tax take from 23 per cent of GDP to 24.9 per cent.”

That arithmetic understandably led Berg to remark: “It’s widely appreciated that deep down Tony Abbott is a tax-and-spend conservative.

“Now we know his is a tax-and-spend government.”

Tens of thousands of column centimetres of commentary were forthcoming about budget 2014 but the 10 Carling-Berg paragraphs – five each – highlighted above are the nub of the matter.

Messrs Abbott and Hockey, along with Finance Minister Mathias Cormann, are simply old-fashioned big-taxing conservatives, meaning that at the end of their present term taxpayers will have more, not fewer, dollars snipped from pay packets than today.

Equally depressing has been the behaviour of the premiers, especially the three conservative east coast leaders – Queensland’s Campbell Newman, Mike Baird from NSW, and Victoria’s Denis Napthine – who have their hands out for more Canberra money, so they can spend more.

So it wasn’t long before that old chestnut of changes to the GST surfaced.

Nor are things further west encouraging, with another big-spending Liberal Party member, Colin Barnett, on the way to boosting the state’s debt to $30 billion – from $6.5 billion (less than $1 billion in 1998) when he gained office in 2008.

The only thing we can be sure of is that when repayment time arrives, the seven leading Liberal lights mentioned above will be comfortably ensconced, far away from public gaze, enjoying their taxpayer-backed parliamentary pensions, like Ms Gillard and Mr Rudd are enjoying now.

But we and our unsuspecting offspring remain destined to continue kicking far more into the Canberra can than we do today.


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