1 May 2014

When is Deficit a cliff. Only when we can't see the bottom!


The Abbott government is selling us the end of the world story with regard to the ballooning deficit as if it all must be fixed tomorrow.

Indeed it will become a problem if not planned for, however a conservative government can't do it because it would mean addressing middle to high income welfare.

The rich and upper middle income earners in this country have hidden most of their funds in this system, capital gains, home ownership for pension, low tax in superannuation or no taxing of trusts.

No Conservative government can put their benefactors offside so much, so what are they about to do, not much me thinks, oh they'll tinker here and there, downsize some government departments and abolish others.
Guess what, at the end of their time in power the public service will be the same or larger than when they started.

The only way we will achieve the modifications to the tax system and welfare system in this country is to get bipartisan support for a proper review, not a review by the left or right of politics because they'll never come up with a logical outcome.

Oh yes didn't treasury do such a report, no it must have been a dream because both sides of politics ignored it, didn't they?

We are still a very lucky country in spite of our flawed and sometimes stupid politics and politicians.

Excerpts from an article by Jonathan Swan 
Most countries would be envious of Australia’s public finances as they currently stand,” said Barclays Australia chief economist Kieran Davies, who, like the other economists interviewed, believes long-term, structural changes to the economy are required rather than short-term fixes like a debt tax.

Ideas floated by the economists included abolishing negative gearing, taxing trusts like companies, broadening or raising the GST, reducing the capital gains tax discount and tightening tax breaks for high income earners’ superannuation.

There was no budget urgency that would justify temporary “debt tax” rises, they said.

“We don’t need a surplus tomorrow,” said Chris Richardson, economist and partner at Deloitte Access Economics.

“We don’t even necessarily need it in five years time. I’m more than happy with us getting back to sustainable fiscal finances over the long term.

 “The politics would tend to suggest moving earlier rather than later but on the economics there’s no rush.”

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