Joe Hockey gave his first domestic address as Treasurer to a Centre for Independent Studies event last Friday, and stated that a goal of the new government is “reining in spending [and] reducing the tax burden on business and taxpayers”.
His commitment to reducing the size of government is welcome. There are undercurrents within political and intellectual circles now that perhaps the limits of government have been reached, and that government overreach is becoming the problem of the era.
This is especially the case in Europe and the US, but evident in Australia too.
Hockey set out the challenge for Western democracies in a speech last year in London: the age of debt-fuelled entitlement spending is over. I am not aware of a major political figure anywhere being as clear as Hockey on this.
The reasons for this state of affairs are clear (though politicians have made little attempt to address them): the ageing population, a growing core of people in long-term unemployment, and the insatiable demands from the voters for new spending measures.
Massive expansion of public and private debt has funded these spiralling demands for more consumption and entitlement spending. This Ponzi scheme makes people think they can have extra benefits today and that if they end up paying for them at all, it will be some other day, but better still, that someone else will pay.
The burden of restoring balance to our fiscal position will fall on future generations. The moral aspect of this problem is intense and needs to be addressed now.
While the mantra of living within our means is welcome, the likelihood of government being able to meet the obligations it has already committed to is fragile. People are already paying more than enough in taxes to cover the reasonable functions of government, yet key responsibilities of government (such as defence) are not being adequately met.
These problems stem from an addiction to government solutions to problems all and sundry. Not only do we seem to turn first to the government to solve so many of our problems, but the results of government spending too are rarely assessed adequately. How that’s to be reversed, given the pressures of the 24-hour media cycle, is an urgent task.
Another significant speech this week came from Maurice Newman, now the chairman of the government’s Business Advisory Council. He pulled no punches about the past half-decade of reckless spending, borrowing and policy chaos.
He said the conditions we now find ourselves in were entirely predictable, and yet the governments of the day committed billions of dollars to programs when the prospect of them being paid for was far from assured.
The current federal government is already in danger of going down the same path with, for example,its proposed expansion of paid parental leave. It’s time to call a halt.
The establishment of the Commission of Audit and other inquiries to focus on government expenditure and efficiency are good steps, but they are only a part of the solution.
Government must find the political will to implement tough solutions to our spending addiction. As Hockey conceded last week, there have been a lot of government inquiries recently, but not much to show for them.
At the very least, while this process of review and audit runs its course, the federal government should not commit to any new spending programs, even those promised. None. Not a dollar.
The government must put the budget on a sound footing in the long term before embarking on any new spending, and such proposals, when mooted, should receive increased scrutiny. The public would go along with this if the government and its ministers were willing to bring the public with them. Symbolic perhaps, but what about a moratorium on new spending until after the 2014 budget, or even to the end of that year?
As Hockey himself said last year: “Once some level of debt is accepted, it becomes too tempting to opt for just a little more. Pretty soon, a little debt becomes a big problem.” The need to increase the federal government’s debt limit shows that the problem is growing; before taking on any more debt, we need a plan to pay it off.
Mr Micawber in Dickens’s David Copperfield outlined the simple truth all governments should heed to a greater or lesser degree:
“Annual income twenty pounds, annual expenditure nineteen pounds nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”
The growth in debt has made us all a little miserable with the potential for far worse. Australia is not in the same bind as many others at the moment, but now is the time to fix the problem to restore some measure of happiness, and not only to the Treasurer.
Greg Lindsay is the executive director of The Centre for Independent Studies.
Home > Commentary > Opinion > Hockey must by guided by the mantra of Mr Micawber
Hockey must by guided by the mantra of Mr Micawber
Joe Hockey gave his first domestic address as Treasurer to a Centre for Independent Studies event last Friday, and stated that a goal of the new government is “reining in spending [and] reducing the tax burden on business and taxpayers”.
His commitment to reducing the size of government is welcome. There are undercurrents within political and intellectual circles now that perhaps the limits of government have been reached, and that government overreach is becoming the problem of the era.
This is especially the case in Europe and the US, but evident in Australia too.
Hockey set out the challenge for Western democracies in a speech last year in London: the age of debt-fuelled entitlement spending is over. I am not aware of a major political figure anywhere being as clear as Hockey on this.
The reasons for this state of affairs are clear (though politicians have made little attempt to address them): the ageing population, a growing core of people in long-term unemployment, and the insatiable demands from the voters for new spending measures.
Massive expansion of public and private debt has funded these spiralling demands for more consumption and entitlement spending. This Ponzi scheme makes people think they can have extra benefits today and that if they end up paying for them at all, it will be some other day, but better still, that someone else will pay.
The burden of restoring balance to our fiscal position will fall on future generations. The moral aspect of this problem is intense and needs to be addressed now.
While the mantra of living within our means is welcome, the likelihood of government being able to meet the obligations it has already committed to is fragile. People are already paying more than enough in taxes to cover the reasonable functions of government, yet key responsibilities of government (such as defence) are not being adequately met.
These problems stem from an addiction to government solutions to problems all and sundry. Not only do we seem to turn first to the government to solve so many of our problems, but the results of government spending too are rarely assessed adequately. How that’s to be reversed, given the pressures of the 24-hour media cycle, is an urgent task.
Another significant speech this week came from Maurice Newman, now the chairman of the government’s Business Advisory Council. He pulled no punches about the past half-decade of reckless spending, borrowing and policy chaos.
He said the conditions we now find ourselves in were entirely predictable, and yet the governments of the day committed billions of dollars to programs when the prospect of them being paid for was far from assured.
The current federal government is already in danger of going down the same path with, for example,its proposed expansion of paid parental leave. It’s time to call a halt.
The establishment of the Commission of Audit and other inquiries to focus on government expenditure and efficiency are good steps, but they are only a part of the solution.
Government must find the political will to implement tough solutions to our spending addiction. As Hockey conceded last week, there have been a lot of government inquiries recently, but not much to show for them.
At the very least, while this process of review and audit runs its course, the federal government should not commit to any new spending programs, even those promised. None. Not a dollar.
The government must put the budget on a sound footing in the long term before embarking on any new spending, and such proposals, when mooted, should receive increased scrutiny. The public would go along with this if the government and its ministers were willing to bring the public with them. Symbolic perhaps, but what about a moratorium on new spending until after the 2014 budget, or even to the end of that year?
As Hockey himself said last year: “Once some level of debt is accepted, it becomes too tempting to opt for just a little more. Pretty soon, a little debt becomes a big problem.” The need to increase the federal government’s debt limit shows that the problem is growing; before taking on any more debt, we need a plan to pay it off.
Mr Micawber in Dickens’s David Copperfield outlined the simple truth all governments should heed to a greater or lesser degree:
“Annual income twenty pounds, annual expenditure nineteen pounds nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”
The growth in debt has made us all a little miserable with the potential for far worse. Australia is not in the same bind as many others at the moment, but now is the time to fix the problem to restore some measure of happiness, and not only to the Treasurer.
Greg Lindsay is the executive director of The Centre for Independent Studies.
• Subscribe
Subscribe now and stay in the loop with our giving appeals, event alerts, newsletters and research updates.
We are always pleased to hear from you. If you have any questions or feedback, please contact us here: