A group of 63 leading economists have put their name to a statement rejecting the idea that Australia is facing a “budget emergency”. The government has frequently cited Australia’s debt levels as a form of “intergenerational theft” committed by a spendthrift Labor administration, requiring a significant readjustment in the budget to get the country back into surplus. But the economists’ statement stresses “Australia’s ability to manage public debt is very strong”, with the country not facing “any present or imminent debt crisis”. Blaming the gap between government spending and revenue on large tax cuts during the early stages of Australia’s mining boom, the economists argue that the government’s chief aim shouldn’t be to generate a surplus. “The most effective route to restored fiscal balance is to help more Australians find work, earn incomes, and pay taxes,” the statement reads. “But major and unnecessary reductions in government program spending and public sector employment would have the opposite effect. “The timing and method of deficit reduction must be balanced with other economic and social goals, including job-creation, infrastructure needs, and social conditions. Richard Denniss, executive director of The Australia Institute, which gathered the economists together for the joint declaration, said it was “bizarre” that the views of economists had been ignored in the debate over Australia’s debt. “The debt isn’t a crisis, the real crisis would be having one million people unemployed in Australia,” Denniss told Guardian Australia. “Unemployment is rising, which makes it a very bad time to be making cuts to the budget. Denniss said revenue could be significantly boosted by reforming tax concessions for superannuation. “That would bring in $40bn and there’s not much you can’t do with $40bn,” he said. “Unfortunately, Australians have been substantially misled about the nature and extent of the so-called budget emergency. I hope that economists can help reassure them that no such crisis exists.”
Posted on: Thu, 18 Sep 2014 01:55:37 +0000