Dr Ken Henry, former secretary to the Commonwealth Treasury and father of the Henry tax review, was recently reported as saying that in the long-term taxation will need to rise by 5% of GDP. This would represent a large increase in Australia's tax burden, which has averaged 28.5% of GDP since 2000.
The CIS has mapped a very different path in its TARGET30 campaign, which advocates reducing government spending by 5% of GDP over the next 10 years so as to avoid pressure for taxes and public debt to rise.
There could be no clearer contrast between visions for the size of the public sector – one for more spending and taxing, the other for less.
The choices that have to be made in matters of public spending and taxing should be a key issue in the election campaign, but voters will struggle to hear any hint from the competing parties – apart from vague generalisations – that there is a choice to be made between spending more and taxing more on the one hand, and spending less and taxing less on the other.
In fact, the major parties seem to be on a unity ticket when it comes to the big-ticket items that will drive government spending inexorably higher in the years ahead, while at the same time they are happy to suggest that taxes will not need to rise.
The Pre-election Economic and Fiscal Outlook (PEFO) released this week was scrutinised mainly for what it says about when the budget will be balanced, but the long-term projections attached to the PEFO are in many ways more interesting. They show that a business-as-usual approach will result in government becoming bigger and bigger (spending and taxation rising as shares of GDP) once a balanced budget is (supposedly) reached three years from now.
Voters deserve better than tired old arguments about election costings and budget black holes, which although relevant, are served up in such a way as to distract attention from the key issues.
Robert Carling is a Senior Fellow at The Centre for Independent Studies.
Home > Commentary > Opinion > What a difference five percent can make
What a difference five percent can make
The CIS has mapped a very different path in its TARGET30 campaign, which advocates reducing government spending by 5% of GDP over the next 10 years so as to avoid pressure for taxes and public debt to rise.
There could be no clearer contrast between visions for the size of the public sector – one for more spending and taxing, the other for less.
The choices that have to be made in matters of public spending and taxing should be a key issue in the election campaign, but voters will struggle to hear any hint from the competing parties – apart from vague generalisations – that there is a choice to be made between spending more and taxing more on the one hand, and spending less and taxing less on the other.
In fact, the major parties seem to be on a unity ticket when it comes to the big-ticket items that will drive government spending inexorably higher in the years ahead, while at the same time they are happy to suggest that taxes will not need to rise.
The Pre-election Economic and Fiscal Outlook (PEFO) released this week was scrutinised mainly for what it says about when the budget will be balanced, but the long-term projections attached to the PEFO are in many ways more interesting. They show that a business-as-usual approach will result in government becoming bigger and bigger (spending and taxation rising as shares of GDP) once a balanced budget is (supposedly) reached three years from now.
Voters deserve better than tired old arguments about election costings and budget black holes, which although relevant, are served up in such a way as to distract attention from the key issues.
Robert Carling is a Senior Fellow at The Centre for Independent Studies.
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