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In the lead up to the federal budget next week, Crikey is publishing various contributions on theme of “fantasy budget”. Yesterday Per Capita made the argument for progressive tax. Today, Helen Razer takes another approach…
Well, your efforts have been extremely disappointing this year, given the tremendous global tailwinds most economies have enjoyed.
You have one budget before the next election. So here’s the plan. This is where we will be this June, based on last Friday’s Finance Department update:
There is no excuse for deficits now. The Seychelles, Slovakia, Slovenia, Sweden, Switzerland and Somalia are all in surplus, and they’re just the countries starting with S. Most well-run economies are now balancing the books. Australia can too.
At least you raised revenue this year more than you increased spending, as we advised last year. But nowhere near enough.
Here is where we need to be in June 2019:
Clearly, more waste must be cut. You can trim billions from offshore detention, stupid departmental relocations, unnecessary defence outlays and handouts to big business.
But where you have failed most miserably, Scott, is with revenue. Just appalling! Column A, below, shows where revenue will be this June. Column B shows where we need to be next year. Column C shows the percentage increase required.
You will easily achieve this 10% overall increase without changing tax rates. The current global boom in trade and commerce will see to that. You just have to stop the blatant top end rorts.
Now, here’s the plan to sell this budget, Scott. Follow this and you will take a $16 billion surplus to the election.
- Explain that taxes in Australia are actually quite low. Of the 35 rich OECD countries, Australia is in the lowest seven by tax revenue relative to gross domestic product.
- Company tax must increase 26% to $105.5 billion. The Australian Bureau of Statistics (ABS) shows profits before tax rose by a thumping 40.1% in 2017 over 2016 (see table 9 here). That’s the strongest annual lift since the recovery from the early 2000s recession. You should shout that from the rooftops!
- Personal tax up 6.0% is, again, no problem. Last Thursday’s ABS annual tax history shows personal tax rose 11.3% in 2011. Then up 10.8% the next year. Over his last three years, world’s best treasurer Wayne Swan increased the personal tax take by an average of 9.4%. That was during the global financial crisis. In contrast, the Coalition has seen it rise by an average of only 5.3% over its four years. Up 6.0% during the current boom will be a breeze.
- Yes, the fringe benefits tax must increase to $5.1 billion. But it was $3.7 billion in 2006-07, so the annual hike will be less than 2.7% since then. The executives have been laughing at you, Scott. Not with you.
- Finally, you have to admit that the last four deficit budgets have been disastrous. Australia’s global ranking on every important variable has plummeted. Economic growth, for example, now ranks equal 125th in the world. Equal with Somalia.
You increased the gross debt by $254 billion. That’s $43 billion more than Labor stacked on in nearly six years — during the worst global recession in 80 years. You have reduced the nation’s net worth by a staggering $201.3 billion down to negative $407.3 billion!
This is your big chance, Scott. Almost certainly your last.