Australian Politics – The Budget: Heading In The Right Direction, But Small Steps

Posted on Mon 05/07/2018 by

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By Andrew Bolt ~

Good as far as it goes: 

The Turnbull government is also expected to confirm in ­tomorrow night’s budget that it will return the balance sheet to surplus in 2019-20, a year earlier than forecast but by only a slim margin, while announcing an extra $24.5 billion in new infrastructure spending across the country.

At the same time it is likely to confine immediate tax relief this year to increasing the low-income tax offset, which would limit the windfalls to those workers on taxable incomes of up to $87,000, with the promise of delivering tax cuts for higher income brackets by 2024.

But these are modest promises, hampered by the Government’s desire to spend even more. And the Government’s tax cuts are almost certain to be trumped by Labor’s.

Treasurer Scott Morrison (left) and Prime Minister Malcolm Turnbull

Then there’s this attempt to write into a law – Labor-style – a landmine in case Labor wins the election:

Scott Morrison will formally ­enshrine the government’s tax limit of 23.9 per cent of GDP in the nation’s fiscal future by adopting it as official Coalition policy and writing it into this year’s budget rules in a move that would force a Labor government to either ­reverse it or dramatically cut its own spending.

Alan Kohler is not impressed by this purely political attempt to portray Labor as the party of high taxes:

It’s hard to imagine anything more ridiculous than a hard limit on tax receipts as a percentage of GDP, especially an arbitrary one like 23.9 per cent.

Where is the report of the commission of inquiry into the optimum level of tax receipts as a percentage of GDP in the 21st century, including international comparisons? Or even some kind of intellectual support for the idea that gross domestic output is the right comparison for measuring tax? Where, in fact, did this weird idea come from?

It happens that, according to last year’s budget papers, tax receipts have only gone above 23.9 per cent of GDP four times out of the past 47 years, and the ratio was forecast to stay below it for the next four years as well.

But those four years — 2000-01, 2002-03, 2004-05 and 2005-06 — paid off the national debt entirely and established the Future Fund with capital of $18 billion, which the FF has turned into $140.8 billion in 12 years by being left alone to get on with the job good long-term investing.

But we’ll have no more of that, thanks very much! No big surpluses, for us! It’ll be 23.9 per cent from now on and no more.

And it’s not as if the Coalition is applying the same sort of discipline to spending, or proposes to.

And there’s this corrective:

Using the historical data in last year’s budget paper no. 1, we find that the average tax to GDP ratio under Coalition governments has been 22.1 per cent and under Labor governments it has been 20.6 per cent.

Andrew Bolt writes for the Herald Sun, Daily Telegraph, and The Advertiser and runs Australia’s most-read political blog. On week nights he hosts The Bolt Report on Sky News at 7pm and his Macquarie Radio show at 8pm with Steve Price.

Read more excellent articles from Andrew Bolt’s Blog . http://blogs.news.com.au/heraldsun/andrewbolt/