Wayne Swan has announced that tax revenues were $7.5 billion lower than forecast this financial year, and the budget will not return to surplus until tax collections recover.
The Opposition has heard the signals and back-pedalled on the promise of immediate surplus budgets under a Coalition government.
But according to a new report from the Grattan Institute, the hole in tax revenues is only part of the budget problem. What its research shows is that without substantial policy changes, Australian governments (federal and state) will be looking at $60 billion combined annual deficits within a decade. Why? Not because of Gonski or the NDIS (though they would exacerbate the situation) but because health costs have been rising substantially, as have aged, disability and family support payments, while tax revenues (including the mining and carbon taxes) won't materialise as planned.
The sustained increases in health spending (which are estimated to comprise 50 per cent of the long-range shortfall) are not primarily the result of an ageing population, but of changes to the practice of medicine: "Australians of all ages are seeing doctors more often, having more tests and operations, and taking more prescription drugs. They are living longer, better lives, but someone has to pay for it."
It's unlikely that either major party will express their sense of fiscal responsibility in quite these terms.
Nick Feik Politicoz Editor
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Swan Warns No Surplus Til Tax Rebounds
“Federal Treasurer Wayne Swan has warned that the budget will not return to surplus until tax collections recover from a strong dollar ‘sledgehammer’ that he said pushed revenues $7.5 billion below official forecasts for this financial year.”