Thursday, 24th April 2014

HEAVY LIFTING

Joe Hockey continued his pre-budget softening-up exercise with his speech at an event for the conservative magazine Spectator Australia yesterday. It went largely as expected. Australia's finances are unsustainable, he said, and the government is committed to repairing them.

On his list of 'Large and Fast Growing Programmes' he singled out the aged pension (1st), aged care (8th) and the Pharmaceutical Benefits Scheme (10th) as increasing faster than the economy is growing.

But he didn't mention defence spending, which is 2nd on that list and which is also increasing faster than GDP growth. Nor did he mention that the government's Direct Action climate policy was outside the terms of reference of his Commission of Audit, whose 900-page report is to be publicly released next week.

Also outside the Commission's ambit was Australia's extraordinary system of tax concessions to its wealthiest residents, the highest among developed nations relative to GDP. Superannuation tax concessions, for instance, are growing even faster than the aged pension despite costing the budget about the same amount.

The government has the burden of showing why it intends to cut spending without addressing tax concessions. It hasn't discharged it yet. Perhaps it will on 13 May.

Russell Marks
Politicoz Editor

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