Daily BulletinHoliday Centre

The Conversation

  • Written by The Conversation
imageFinance Minister Mathias Cormann said there is "no easy way to repair the budget".Paul Miller/AAP

Finance Minister Mathias Cormann says government spending needs to be reduced over time to an average of around 24% of GDP “at the most”, and warns that sustainable budget reform cannot be delivered without continuing structural reform of programs.

Speaking at the Sydney Institute, Cormann said there was “no easy way to repair the budget, as suggested by some, just by slashing the public service”.

Spending was expected this year to come in around 26% of GDP, and was projected to come down to 25.3% by 2018-19. “But to ensure federal government expenditure is affordable in our economy and doesn’t force us into higher taxes overall, over time we need to get back to an average level of government expenditure of about 24% as a share of GDP at the most and stabilise it at that level.”

He said that in the last year of the Howard government, spending as a share of GDP was 23.1%, and over the whole Howard period expenditure averaged about 24%.

Rebutting the notion that cuts to the bureaucracy would do the budget repair job, Cormann pointed out that the public service wage bill was less than 5% of federal government spending.

“Most of our federal government expenditure goes into programs – the age pension, the disability pension, the NDIS, unemployment benefits, medical benefits, pharmaceutical benefits, payments to the states and territories to support their schools and hospitals, our border security, our defence forces and more.

“Of course we will continue to pursue our smaller government agenda – seeking to ensure that public spending on government administration and services is as efficient and as effective as possible,” he said. “But we will not be able to achieve a sustainable budget position without continuing structural reform of government program spending.”

Earlier on Monday, Treasurer Scott Morrison said the spending challenge “is not about cuts, it is about control – because if you can control expenditure and can get a tax system that is going to help grow the economy, then that is what is over time going to strengthen the budget and this is what our focus is.”

Asked whether “control” was a new word for cuts, Morrison said: “No, it is a real word for keeping the lid on the pressures that are driving expenditure up and at 26% of GDP, that is not a sustainable position.”

Morrison also again appeared to leave the way open to look at the tax concessions on superannuation. Former prime minister Tony Abbott had ruled this out, but the Turnbull government is trying to keep all options open publicly.

Morrison told 3AW that it was important to keep stability and certainty in that area but “there have been many issues raised in the area of retirement incomes”.

“The old politics of a few weeks ago and the last seven years which has been very combative I think has unnecessarily stymied debate and consideration of things. It is good to be in an environment where other things can be practically considered.”

Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond the academic appointment above.

Authors: The Conversation

Read more http://theconversation.com/government-spending-should-be-eventually-reduced-to-24-of-gdp-cormann-48265

INTERWEBS DIGITAL AGENCY

The Conversation

Politics

Closing the Gap Statement to Parliament

Mr Speaker, when we meet in this place, we are on Ngunnawal country. I give my thanks and pay my respects to our Ngunnawal elders, past, present and importantly emerging for our future. I honour...

Scott Morrison - avatar Scott Morrison

Prime Minister Interview with Alan Jones

ALAN JONES: Prime Minister, good morning.    PRIME MINISTER: Good morning, Alan.    JONES: I was just thinking last night when we're going to talk to you today, you must feel as though you've ...

News Company - avatar News Company

Prime Minister Bridget McKenzie press conference

PRIME MINISTER: Good afternoon everybody. The good news is that the Qantas flight is on its way to Wuhan and I want to thank everybody for their cooperation, particularly the Chinese Government as...

Scott Morrison - avatar Scott Morrison

Business News

Top 5 Green Marketing Ideas for Your Eco-Friendly Small Business

According to studies, about 33 percent of consumers prefer buying from brands that care about their impact on the environment. This is good news for anyone running an eco-friendly business. It’s a...

Diana Smith - avatar Diana Smith

Choosing the Right Coworking Space For Your Business

As the capital of Victoria in Australia, Melbourne is inhabited by millions of people and is known as one of the most liveable cities in the world. The latter is due to the city’s diverse community...

Sarah Williams - avatar Sarah Williams

What Should You Expect from A Carpentry Apprenticeship?

Those wanting to pursue a career in woodwork, whether it be to make furniture, construct buildings or repair existing wooden structures, will have to first commence a carpentry apprenticeship. This ...

News Company - avatar News Company

Travel

Travelling With Pets? Here Is What You Should Know

Only a pet parent can understand the dilemma one experiences while planning a vacation. Do you leave your pets at home?  Will you get a pet sitter or someone to take care of them while you are away?...

News Company - avatar News Company

How to Be a Smart Frugal Traveller

You are looking through Instagram, watching story after story of your followers overseas at a beach in Santorini, walking through the piazza in Italy, and eating a baguette in front of the Eiffel ...

News Company - avatar News Company

HOW TO PREPARE FOR YOUR GRADUATION TRIP

Graduation is the stage of life when a student receives the rewards of hard work of years. It must have taken sleepless nights and tiring days to achieve the task. Now, as you have received your cov...

News Company - avatar News Company

ShowPo