PETA CREDLIN

Sunday Herald Sun - - Opinion -

NO­BODY can spend what they don’t have or what they can’t af­ford to bor­row and re­pay — and, in the long run, that’s no less true for gov­ern­ments than it is for in­di­vid­u­als, house­holds and busi­nesses.

As any­one who’s ever run up their credit card or ne­glected to pay the phone bill soon enough finds out, liv­ing be­yond your means has con­se­quences.

When gov­ern­ments con­sis­tently spend more than they raise — even­tu­ally — lenders go on strike and spend­ing has to be slashed in a cri­sis; or the cur­rency de­val­ues and every­one’s wealth is eroded. The bot­tom line is that you can’t avoid the bot­tom line.

Here’s what we know about this week’s Bud­get: there will be per­sonal in­come tax cuts and there will be fur­ther big spend­ing on in­fra­struc­ture projects. What there won’t be is any fur­ther tax in­crease (that’s good) or any se­ri­ous at­tempt to cur­tail spend­ing (and that’s bad).

In other words, the govern­ment is in full pre-elec­tion mode and is more than happy to save Mal­colm Turn­bull’s job by shout­ing the bar on the na­tion’s credit card.

Ev­ery time this delin­quency is pointed out, the govern­ment’s back­ers in­sist that La­bor would be worse. That’s true. Taxes would be higher and spend­ing would be higher be­cause this is an Aus­tralian La­bor Party that’s more and more mod­el­ling it­self on Jeremy Corbyn rather than Bob Hawke.

But that hardly ex­cuses a Coali­tion govern­ment — orig­i­nally elected on a plat­form of bud­get re­pair — when it re­peats La­bor’s old trick of spend­ing more, while con­jur­ing away the deficit via un­re­al­is­tic as­sump­tions about growth in the out years.

It’s hard to over­state the sig­nif­i­cance of growth fore­casts in the Bud­get numbers. The fore­cast re­turn to sur­plus in 2021 as­sumes 3 per cent an­nual eco­nomic growth.

But the cur­rent ac­tual rate of eco­nomic growth — just 2.5 per cent — if it per­sists, would give an an­nual deficit of no less than 8 per cent of GDP (or $140 bil­lion in to­day’s terms) by mid-cen­tury. And a 10 per cent fall in the terms of trade, for in­stance, would de­press cur­rent rev­enue and in­crease the an­nual deficit by $5 bil­lion.

The govern­ment’s de­ci­sion to aban­don the in­crease in the Medi­care levy that was sup­posed to help pay for the NDIS was smart pol­i­tics (for once) but is still poor eco­nom­ics.

Every­one is in favour of do­ing the right thing by peo­ple with se­ri­ous dis­abil­i­ties but numbers are up and costs are up be­cause every­one who’s out wants to be in, and the range of dis­abil­i­ties cov­ered are much greater than orig­i­nally planned.

And be­cause the feds pay the ex­tra bills but the states con­trol the gov­er­nance, no one is re­ally in charge of this po­ten­tial fis­cal sink­hole that’s pro­jected to cost more than $36 bil­lion a year by the end of the next decade.

To put it in per­spec­tive, that’s the equiv­a­lent of al­most two-thirds of the to­tal cost of Aus­tralia’s much de­bated sub­marines in one year of dis­abil­ity fund­ing alone.

Bak­ing in per­ma­nent spend­ing on the back of tem­po­rary rev­enue (as the govern­ment did this week when it an­nounced that — sur­prise — ex­ist­ing taxes could cover the NDIS af­ter all) is more of what got us into this semi-per­ma­nent debt and deficit mess in the first place.

It’s a sign of how log-jammed our sys­tem has be­come that the com­pany tax cuts first an­nounced in the bud­get-be­fore-last are still not leg­is­lated two years, and an elec­tion, later.

My sense is that the govern­ment will try to dress them up with the new per­sonal in­come tax cuts into some sort of wider tax “re­form pack­age” to give a win to Xenophon-turned-in­de­pen­dent Se­na­tor Tim Storer and fi­nally get this pol­icy leg­is­lated, and out of the po­lit­i­cal fir­ing line.

With banks in the dock each day at the royal com­mis­sion, the PM and Trea­surer are bleed­ing po­lit­i­cally when they say they care about bank cus­tomers, yet in the same breath, ar­gu­ing for cor­po­rate tax cuts and try­ing to ex­plain away their op­po­si­tion to the in­quiry in the first place.

Then there’s the en­tirely un­nec­es­sary fight the govern­ment has picked with par­ents over the $20 bil­lion Gon­ski spendathon that still man­ages to short-change Catholic schools.

Judg­ing a school’s needs on the ba­sis of where its par­ents live was al­ways go­ing to make it im­pos­si­ble to have low-fee in­de­pen­dent schools in mid­dle-class ar­eas.

Ever since Men­zies’ time, the Libs have been the party for choice in ed­u­ca­tion; this is not a po­lit­i­cal eq­uity a govern­ment with a one­seat ma­jor­ity can af­ford to lose.

Last week, two sep­a­rate polls (Sky News ReachTEL and JWS) had a ma­jor­ity of Aus­tralians pre­fer­ring an ear­lier re­turn to sur­plus and deal­ing with debt, over per­sonal in­come tax cuts.

That gives me hope that there’s still peo­ple out there want­ing to see the govern­ment get its house in or­der, be­fore they see an ex­tra $10 in their weekly pay.

That’s be­cause or­di­nary peo­ple know that kick­ing a prob­lem down the road only de­lays the in­evitable, and of­ten makes it worse. With debt now at $522 bil­lion, and no real plan to tackle it, how much worse do we think it can get? PETA CREDLIN IS A SUN­DAY HER­ALD SUN COLUM­NIST

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