The issue in a nutshell
The most recent budget forecasts a decade of budget deficits with unfunded spending permanently higher than in the past 30 years.
Why is it an issue?
Since the pandemic, federal spending has increased to a long-term average of 26-27% of GDP. The 2022 budget papers predict a decade of spending at those levels, while government receipts will never top 26%, leaving budget deficits well into the 2030s on top of existing debt.
What the parties say
After once boasting of being “back in black”, the Coalition now says Australia’s massive debt is affordable because it will shrink as a proportion of GDP over time. Labor says the Coalition’s wasteful spending must stop, but otherwise offers no commitment to increasing taxes or reducing spending that differs from the Coalition. Labor’s previous commitments to improving the efficiency of taxes and removing damaging concessions like negative gearing have been abandoned after Coalition scare campaigns in 2019.
Discussion
After two elections in which it committed to tax reform, Labor has ditched its politically dangerous agenda of ending rorts and heavily abused tax concessions — just at the moment when lifting tax revenue fairly is needed more than ever.
The Coalition has permanently increased the size of the federal government spending to over 26% — a level once reserved for economic crises — while our tax base remains at Howard-era levels of 23% or less. The result is a persistent gap between spending and receipts that will not be closed within the current long-term forecast for the budget. Even with a windfall from surging commodity prices, the government is still promising a substantial budget deficit of $80 billion this year — the kind of level that before the pandemic would have panicked politicians and sent economists hysterical. Such is the change in the political environment, it’s now barely even an election issue.
Remember – it’s only bad debt if the ALP incur it. The Debt & Deficit bogeyman will rise from the grave once the ALP return to government.
Speaking of debt and deficit. I read on The Conversation that Joe Hockey has now written a book, mostly about his time as Oz ambassador to Washington in Trump’s time. There is an interview on TC between Eleventy and Michelle Grattan with hilarious set of BTL comments.
Should Labor manage to win this election the debt will be an issue again. Just wait.
BK, you know as well as I do that not just Labor, but no party, can so much as whisper the T-word, in this election at least. Maybe if they can get into office, and look good for a second term, then maybe in a third term that old reality – tax is the price we pay for living in a civilised society – can once again be spoken aloud.
Like some in the US GOP proposing a tax for ‘seniors’; electoral suicide but a serious fiscal issue when they are becoming the most significant voting cohort.
A tax for seniors i the US could well be fraught, given the inhumane inadequacies of the US social systems.
A better approach might be a wealth tax, although probably a harder fight, as every pissant minimum-wage slave seems to think that the American dream is real.
Of a wealth tax makes sense equity wise, but fat chance with the Koch ‘owned’ GOP….
And again “Awaiting for moderation and Godot” … busy today?
“Fail to plan = plan to fail”.
A little understood s-t-r-a-t-e-g-y s-a-d-l-y :- “Inch by inch – bite by bite – don’t scare the chooks, you’ll get covered in s-h-i-t-e” .
…. Too impatient? Too g-r-e-e-d-y?
Leery about even their own party cohort’s vision and g-r-a-s-p, to carry on whatever they started?
Too many want to “leave their m-a-r-k” – and s-c-o-f-f the lot in one go.
…. Leaving nothing, including their “l-e-g-a-cy”.
…Only 2 goes this time… for what?
But this is a “monolithic Topsy Coalition deficit” so it doesn’t matter too much – to the Coalition and their media sycophants anyway : ….. now if it was “Labor’s”, that’d be a ‘kettle of fish’, to that media…….
Wow, that deficit is nearly 8 times higher than the deficit Swan got lashed over, by Hockey et al, back around 2012-2013.
What young Joshy has claimed – “the Coalition now says Australia’s massive debt is affordable because it will shrink as a proportion of GDP over time” is correct and always has been correct.
Australia has never paid a cent on it’s wartime borrowings because of the truth of that approach. It’s called Keynesian economics and relates specifically to borrowings from within a sovereign country; in other words, that ‘debt’ is just a double book entry and has no real meaning because it it not tied to any external.
“Labor says the Coalition’s wasteful spending must stop, but otherwise offers no commitment to increasing taxes or reducing spending that differs from the Coalition.”
That’s merely because my second para is true and always has been.
Both Labor and the cons knew this at the time the cons were spruiking “debt and deficit disaster”. Labor said nothing about it at the time and is saying nothing now because of the general ignorance of the voting public and the journos 90 -odd % of which feed from the devil’s teat of Merde-ochia.
The cons, as always, are beholden to the rich and powerful and even the ones who did know they were lying through their teeth were never going to bite the hand that feeds them and keep the hoi-polloi the great unwashed.
It’s time people like BK and others in their game started telling the truth about this scam for the 5%ers who deliberately ruin the lives and potential of those under them for their own selfish ends.