Releasing CEDA’s latest research report Deficit to balance: budget repair options, CEDA National Chairman Paul McClintock AO said Australia’s deficit problem is particularly alarming because despite a quarter century of sustained economic expansion, we have had eight years of deficit, with four more to go at a minimum according to Government.
“Despite promises from both major political parties to return to surplus this is yet to eventuate and on current forecasts, achieving sustained surplus seems implausible,” he said
“The CEDA report shows that balance can be achieved using measures that will be politically palatable and can gain community consensus.
“Australia needs to have a much larger national conversation around structural economic reform, in particular tax and key areas such as bracket creep, corporate tax rates and GST.
“Reform is much easier during periods of fiscal strength. Removing the deficit by 2018-19 will allow Australia to reset the conversation on economic reform.
“Current generations of Australians have experienced an explosion of wealth in recent decades.
“Yet by running deficits during this period of economic expansion we are essentially saying that our increased wealth is not enough and we expect future generations to pay for our spending today.
“In particular, if you are under 30 you should be up in arms because the current situation is completely unfair.
“In addition to the penalty on future generations, as a player in the global economy, running a large deficit means we have no flexibility to respond to unexpected economic shocks.
“This means political choices to insulate and boost our economy become limited.
“Deficit and the resultant interest on debt narrows government spending choices by reducing the Budget pool and diverting money that could otherwise be spent on delivering services and infrastructure.
Mr McClintock said the seriousness and urgency of dealing with the Federal Budget deficit means CEDA has taken a significantly different approach to delivering this report, with a high level expert Balanced Budget Commission formed to oversee the research.
“Commission members were chosen because of significant experience working in economics and policy, having served under governments from both sides, as public servants and leading economists,” he said.
“This is a unique CEDA report but it is necessary because no economic problem, which is in our power to resolve, is graver or more urgent in Australia than the persistence of large budget deficits.”
Mr McClintock said the report provides a number of options for bringing the Budget back to balance by 2018-19 which include a range of measures from changes to the private health insurance rebate, negative gearing, taxes on luxury cars, alcohol and tobacco, industry assistance and public sector efficiency.
“Getting back to surplus won’t be painless – some of it will be tough but we have tried to ensure almost all measures proposed will not affect the most disadvantaged in our society,” he said.
“This is not about taking away concessions from people or money from industry because they don’t deserve it.
“The reality is we have been spending more than we earn for too long and we need a realistic approach to returning to surplus.
“We recognise that it will be for the government of the day to select the measures to achieve a balanced Budget but these options show it is absolutely achievable by 2018-19.
“If our Federal politicians want to deliver something useful in the next term, balancing the Budget should be it.”
Deficit to balance: budget repair options was launched at a National Press Club Address by CEDA National Chairman Paul McClintock AO on 29 March 2016.
Read and download Deficit to balance: budget repair options