Australia has squandered nearly all of the $190 billion windfall from the resources boom over the past decade through a raft of unsustainable government spending programs and tax cuts.The ALP and the Liberals have pissed it away. Neither party has any plan or policy to change their imbecilic economic ways.
With cabinet today expected to discuss savings and tax measures for Chris Bowen's planned economic statement to combat a predicted $8bn slump in revenues, a report from the Melbourne-based Grattan Institute think tank warns of a significant, long-term budget deficit.
Soaring commodity prices have brought a combined benefit to the commonwealth budget of $190bn over the past decade. Of this, $182bn has been either spent or devoted to tax cuts by the Howard, Rudd and Gillard governments. This does not include the combined $87bn of stimulus spending by Kevin Rudd and then-treasurer Wayne Swan following the financial crisis.
While most of the reduction in revenue occurred during the Howard era because of personal income tax cuts and more generous superannuation concessions, most of the spending increase has occurred under Labor.
Dr Minifie said that while Australia had not saved as much as it should have, "it is not too late for a burst of prudence".
At the same time, spending, excluding the stimulus outlays, rose from 20.5 per cent to 23.5 per cent of GDP.
Dr Minifie said that if the increased spending had been devoted to capital investment, such as improved infrastructure, it could be justified as a form of saving. Similarly, it could be argued that increased spending on health and education would boost the future productive capacity of the economy.
Boom's $190bn windfall 'wasted'