Daily Bulletin

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

Writers Wanted

Love in the time of algorithms: would you let your artificial intelligence choose your partner?


A Brief Overview of Australian Gun Laws


The Conversation


Prime Minister's Remarks to Joint Party Room

PRIME MINISTER: Well, it is great to be back in the party room, the joint party room. It’s great to have everybody back here. It’s great to officially welcome Garth who joins us. Welcome, Garth...

Scott Morrison - avatar Scott Morrison

Prime Minister Interview with Ben Fordham, 2GB

BEN FORDHAM: Scott Morrison, good morning to you.    PRIME MINISTER: Good morning, Ben. How are you?    FORDHAM: Good. How many days have you got to go?   PRIME MINISTER: I've got another we...

Scott Morrison - avatar Scott Morrison

Prime Minister Interview with Kieran Gilbert, Sky News

KIERAN GILBERT: Kieran Gilbert here with you and the Prime Minister joins me. Prime Minister, thanks so much for your time.  PRIME MINISTER: G'day Kieran.  GILBERT: An assumption a vaccine is ...

Daily Bulletin - avatar Daily Bulletin

Business News

Getting Ready to Code? These Popular and Easy Programming Languages Can Get You Started

According to HOLP (History Encyclopedia of Programing Languages), there are more than 8,000 programming languages, some dating as far back as the 18th century. Although there might be as many pr...

News Co - avatar News Co

Avoid These Mistakes When Changing up Your Executive Career

Switching up industries is a valid move at any stage in your career, even if you’re an executive. Doing so at this stage can be a lot more intimidating, however, and it can be quite difficult know...

News Co - avatar News Co

4 Costly Mistake To Avoid When Subdividing Your Property

As a property developer or landowner, the first step in developing your land is subdividing it. You subdivide the property into several lots that you either rent, sell or award to shareholders. ...

News Co - avatar News Co

News Co Media Group

Content & Technology Connecting Global Audiences

More Information - Less Opinion