Spend a greater effort on wiser spending
The government has been warning the public for months about spending pressures in the budget, but the response of many observers seems odd. Rather than addressing the problem, a sense of fatalism seems to have crept in.
The new attitude seems to be: Just succumb to costs, there’s nothing we can do, containing spending is just too hard. But taking this fatalistic attitude on spending leaves only two options ahead, both grim.
The first is to slide towards bigger deficits and bigger debt, creating even bigger problems.
We don’t want to end up in that big debt hole.
The second option is to head off the bigger deficit problem with higher taxes, but that brings its own problems.
That extra tax burden acts like lead in the saddlebags of the economy and reduces our competitiveness.
Australia has long benefited from its position as a low-tax country and it would be a mistake to relax discipline for a less-efficient, big-tax position.
So that brings us back to spending. What can be done?
The sensible thing to do is to accept that of course some areas are going to require some extra funding, but redouble efforts to find savings across the board.
Blowout areas should be subject to searching scrutiny.
No portfolio should be exempted from the axing of dud programs, or the refitting of substandard ones.
New spending proposals should be questioned and dissected to determine whether they really are necessary, or whether they can be slimmed down or modified.
Existing spending should be assessed for whether it provides value for money. Some of the most successful savings measures in the past have come from better targeting of spending away from those that don’t need it and limiting it to those that do.
And the savings from smaller spending programs, sometimes airily dismissed as “rats and mice”, can add up to very large sums of money.
Major fiscal consolidations have been done successfully in the past and they can be done again. There is no reason to resign ourselves to secondtier performance. It’s time to end the fatalism on spending.