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Seeking a fair GHG reduction target:part 6- Equitable Reduction Targets

This is the 6th sixth post in the series: " Seeking a consensus on GHG reduction targets ". In earlier posts we suggested 4 prop...

Tuesday, 5 April 2016

Time to take the initiative

Fervor to fiasco

Consider the widely acclaimed Tax reform agenda touted by the newly elected PM just a few months ago. Announced with great enthusiasm and a clear set of guidelines;
 "A reform package must at the very least, raise the revenue we need, share the burden fairly across the community and do so in a way that incentivises employment, investment and innovation." Rebuilding Foundations of Reform 5 Nov 2015
Much has happened in the ensuing months that has tarnished this simply stated and noble goal. Serial qualifications of what will be 'in' or 'out' have muddied the waters. An eloquent Mr T has waffled his way around the subject, with everything 'on the table' except of course GST, and no negative gearing, well perhaps a little bit, but only where it is really justified.

His opponents are well nigh saying 'I told you so', and while his adherents and the media are maintaining the faith, for now, they are eyeing for exits. His numbers, the pedestal on which he justified his ascension, are wavering.

So too Scot Morrison. He joined the Tax reform crusade with great gusto, but his early propositions were beaten down, no doubt by Mr T, leaving ScoMo looking stupid. Saying one thing one day only to withdraw it the next. No wonder he has taken to saying little. Recall the much heralded presentation to the Canberra Press Club. A roomful of economists and political journos well primed with earlier hints of major pronouncements waiting in anticipation to receive... naught. That went over like a lead balloon. No doubt Scomo is not happy having his reputation as an effective 'doer' being trashed even before delivering his first budget.

This political ineptitude has left the electorate nervous about what the budget will bring. With its self- generated constraints and a looming double D can the government pull something out of the hat and regain the popularity it was bestowed for having disposed of Abbott?

Take the initiative now...

The government has shown remarkably poor judgement in the execution of the Tax Reform Debate. The vacuum left by vacillating between what is 'in' or 'out' has enabled the opposition to take the high ground by announcing their own policies and contrasting their decisive position against that of the government. It has shown in the polls. So it is time that the government takes the initiative and sets the narrative for the upcoming budget. 

Detailed policy measures can be left to the budget itself, however the narrative sets the scene, gives the media something to discuss and incidentally highlights ALP's role in creating the massive government debt and the reckless spending that led to our ongoing structural deficit. It also builds on why the LNP was elected in the first place, to be good economic managers.

A suggested Budget Narrative is presented below (this is reprinted from an earlier post Hypothetical Budget FY17 )

Budget FY17 Narrative

Size of government
All money raised by government is revenue foregone by individuals and corporations. Therefore it is incumbent on the government to remain as small as possible but have sufficient revenue to effectively and efficiently deliver the services the electorate mandates.

Historically, average Australian government revenues have been below 25% of GDP. While in recent years this has blown out due to both additional spending and lower tax revenues, your LNP government will return the revenue to and then ensure it remains below this historical average.

Equity
It is incumbent on governments to ensure any spending is equitable across all sections of the electorate. Within any budget there will be individual measures which advantage some sections and disadvantage others, but taken as a whole the measures in any budget will fall equitably across all sections of the community.

Equity also applies to generational equity. It is immoral for the current generation to continue to spend more than it earns and leaving the debt to future generations. Therefore the government will always strive to reduce government debt and to bring the budget into balance.

Current Economic environment 
While we firmly believe in the above two principles, we find ourselves in a difficult situation.
  • The large increases in expenditure initiated under the Rudd/Gillard/Rudd governments and the subsequent collapse of the mining boom have caused a wide and widening gap between Government income and expenditure creating a ongoing structural deficit.
  • The current gap between Expenditure and Income is such that we are failing our own limits on the size of government. Last year government revenue rose to just under 26% of GDP and due to the on going deficit we are failing on generational equity as well.
  • However our structural deficit cannot be redressed in a single cycle, as the consequences of introducing measures to redress it could be counter-productive putting further pressures on the economy and reducing government revenues.
    Our strategy 
    Given these constraints we see it prudent to take gradual but significant steps to redress our issues, with an emphasis on growing the economy while maintaining but not growing government.

    This implies; -
    • Addressing inequities in welfare and superannuation systems whereby lower income earners subsidize higher income earners.
    • Limiting personal tax relief to the real savings achieved by the above measures.
    • Ensuring full compliance with government policies, applies to corporate and personal tax collections, welfare payments etc.
    • Increasing the productivity within government departments.
    • Increasing productivity within business by eliminating red-tape and high-cost industrial relations practices.

    Start now...

    There is no time to lose. Start now.


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