Australia has a structural budget problem. Or, rather, several of them.
We have an ageing population that will drive a massive increase in health and welfare spending in coming decades, with a proportionately smaller workforce to fund it. We have a tax base that, courtesy of cuts to personal income tax and the flaws of the GST, is more heavily dependent on corporate profits and therefore more pro-cyclical. We spend hundreds of billions of dollars via taxation concessions, often to conflicting policy purposes.
And all of our governments are currently dealing with the impacts on revenue of a high dollar, low inflation and the structural shift in consumer spending towards services.
On current polling, Joe Hockey will be our Treasurer from September 15. For all his flaws, he appears to understand the long-term budget problems he will inherit, in a way his colleagues demonstrably do not.
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That Kevin Andrews, one of the worst of Tony Abbott’s deadwood-laden frontbench, was able to convince shadow cabinet of the merits of opposing the government’s cuts to the baby bonus against Hockey does not augur well for the Coalition’s fiscal discipline once in office.
Hockey has been leading a long ERC-like process within the Coalition, with the aim of finding savings and instilling some fiscal discipline that his leader apparently is incapable of delivering. His colleagues should be supporting him. Parties that are lazy in opposition end up being lazy in government. Hockey is doing his best to ensure that doesn’t apply to a future Coalition government. All power to him.
It’s the media debate we had to have: editors Jason Whittaker and Cathy Alexander join Crikey media writer Matthew Knott for a lively discussion on Stephen Conroy’s media regulation proposals and the fierce reaction from the press. Download the latest Crikey Calling episode here.
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