[An example of Hockey thinking...A remote community using diesel to make electricity does not have to pay tax on that fuel. But it is unable to exchange the future cost of the subsidy for a one-off grant to install solar panels. The diesel fuel rebate now costs the budget $5.4 billion a year in foregone revenue. ] While Hockey hates to admit it, budget deficits in Australia are primarily caused by fluctuations in revenue rather than big increases in spending. Over the past 20 years, government spending has averaged about 24 per cent of gross domestic product (GDP) with a high of 25.3 per cent and a low of 23.1 per cent. Given the swings in the world economy, the unemployment rate and lumpy purchases of defence equipment, that is quite stable. Put simply, anyone who is really worried about deficits should be worried about tax. Hockey is not really worried about the deficit. On the contrary, he loves the deficit, as it allows him to focus on the thing he is really worried about, which is public sector spending.[OUR taxes] His political problem, however, is that Australians like public spending on schools, roads, hospitals and income support for the vulnerable. Thats why he tried to invent a budget crisis - he was trying to force us to take his unpalatable, and unnecessary, medicine. Treasurys determination to drive the tax/GDP ratio lower means it has been a poor guardian of the public purse. Rather than fight to rein in the cost of ballooning concessions, it has seen them as an effective, if inefficient and inequitable, way to shrink the size of the government revenue pie. The Australian public deserves better advice from the Australian public service.
Posted on: Fri, 16 Jan 2015 23:08:15 +0000
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