REIN IN THE SPENDING
AUSTRALIA remains in the midst of economic transition from mining boom to diversification in a competitive, global market.
With national unemployment at 5.9 per cent, the Australian economy is growing an average 2.5 per cent a year, driven by population growth and resource exports to China and southern Asia.
But we also face a contradictory story, where everyday Australians face continual rises in the cost of living and tax.
Soaring property values have resulted in some of the most expensive capital cities in the world and a generation is at risk of being locked out of owning a slice of the Australian dream. Tomorrow’s federal Budget must focus on lowering taxes, cuts to government spending and taking a hard line approach to unnecessary welfare.
The Turnbull government has identified business tax reductions but has been limited in scope by an unwieldy Senate and trenchant Opposition. In March, parliament finally agreed to a 27.5 per cent tax rate for companies with a turnover of up to $50 million, phased in over three years.
Treasurer Scott Morrison is adamant further reductions will be fought for as part of the government’s 10-year plan to reinvigorate business and employment. Rather than a simplified labelling of corporate tax reduction as a windfall for the big end of town, the logic of it being a major jobs driver and magnet for overseas investment must be realised.
But personal income tax must also be on the table, not only as a counterbalance to large employer decreases, but a necessity for working families who are the first to be hit with new or increased taxes across the spectrum of governments. Reining in the untenable $30 billion-plus deficit, and the $1 billion a month that Australia pays in debt interest, must be a cornerstone of the Budget. Unless tangible and significant savings are realised now, the federal blackhole is heading for massive depth and the forecast return to surplus by 2021 will be lost.
The nation also needs to invoke greater austerity, or risk Australia’s vital AAA credit rating, now subject to a negative outlook at S&P Global Rating. While bureaucratic expenditure, unmerited welfare and tax overload have to be tackled, Australia needs smart infrastructure spending to thrive and find its new boom industries.