It’s time our Government trimmed the fat
Over the past three decades we have seen successive Governments expand the size and scope of the Federal Budget, to the detriment of all Australians - and I must emphasise this is a bi-partisan issue.
This year’s budget with all its debt and deficit continues a disturbing trend with the centralisation and growth of the Federal Government. Treasury figures show the total dollar value of Australian Government spending has grown from $176.9 billion in 2000-2001 to $314.3 billion by 2010-11, a total increase of 78 per cent.
This equates to 5.9 per cent growth per annum over the past decade.
This growth in spending is particularly noteworthy given Australia has experienced 19 consecutive years of real GDP growth, unemployment has fallen to 4.9 per cent, a 33 year low, and capital utilisation is at a record high of 84.2 per cent.
So why is the Government spending so much when times are so good? Under the guise of terms such as “progressivism”, “social justice”, “equality” and “a fair go” Australia has advanced along the well-worn path of wealth redistribution and exploitive tax regimes more akin to the broken European Welfare model.
Wayne Swan continues to make statements such as: “This Government is responsible for creating jobs, creating wealth and spreading the prosperity” and “This Government will not waste the resources boom and we will ensure the wealth is spread”.
When did it become OK for the Government to claim credit for the prosperity of free enterprise? This is a false dichotomy and any attempt to spread prosperity “to every postcode” still leaves us with disadvantage in Australia.
Let me be blunt, it is not progressive to grow the federal budget. It is not progressive to continually expand the size and scope of the federal government; it is in fact regressive by any reasoned definition or historical context.
In Australia we have yet to have a robust debate on exactly what the role of the Federal Government is.
In the modern electoral cycle politicians would have educated Australians believe the only policies worth voting for are ones framed around big spending announcements and what voters should expect to receive. Both major political parties have come to believe only further government expansion will ensure campaign success.
Our leaders need to understand the role of Government is not to give things away and redistribute wealth simply to win votes.
The world over the GFC has forced Governments to rethink their obligations to their citizens. Countries like Portugal, Ireland and Spain have been forced to downsize their government with a gun to their heads.
Nobody is suggesting the Government doesn’t have a role to play; government can do a lot of good, but only if it settles for being a hand maiden to the free market.
We ought not to be debating whether we can save a million here or million there, but whether whole departments, agencies, and programs can go. You can hardly call the Department of Climate Change, numerous multicultural councils, over priced school halls, set top boxes and now the Department of Feel Good Carbon Tax Compensation a wise use of taxpayer money.
As MPs we should all be asking ourselves a fundamental question when assessing new legislation: Is this something that needs to be done by government, or are we contributing to a wider problem of government growth and private enterprise subversion?
I think it can bring about smaller government with a fundamental re-think about our tax regime and the way it’s administered.
The Henry Tax Review, despite costing $10 million dollars and taking 18 months to compile, is not worth the paper it’s written on. We need to ask the hard theoretical questions like: Is income tax still necessary, should we use a flat income tax rate and should it be administered by the Federal Government?
I believe it would be possible to reduce the income tax compensated by an increase in the GST and other consumption taxes but we have never even considered this approach. If we were able to cut our income tax bill in half, this would go a long way to solving cost of living pressures.
It would also address much of the government-induced spending inflation. Every attempt at providing handouts, stimulus and subsidies merely inflates the economy and places greater economic pressure on all Australians. We need to get away from the idea that big government makes our lives better. Let’s try the opposite; less government and less tax.
We must ask ourselves: What functions does government need to do? Examples would be defence, law and order. For reasons of social solidarity, what do we want government to do? This may include a basic income for all, universal education and basic healthcare.
Do we want to pay for services through general taxation or consumption taxes? What is the least costly way of raising government revenues?
Australian Government spending is growing faster than private sector investment. Debt financing is allowing our government to grow unchecked. Large government and mass wealth re-distribution has not payed off by delivering higher living standards or better social conditions for Australia.
Bigger is not better. Let the markets play a bigger role in delivering on the promises that politicians have already made.
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