It’s hard to believe, but it wasn’t so long ago that Australia was completely debt-free. Not just debt-free, but a net creditor to the tune of $40 billion. Even more astonishing, the Howard-Costello left behind a sovereign wealth fund of $60 billion dollars.
These days, $60 billion is a rounding error on our debt. Australia is over $600 billion in net debt. Gross debt exceeds a jaw-dropping trillion dollars. What went wrong?
In a word: Labor.
Within the first term of the first Labor government to oust John Howard and Peter Costello, Australia was already plunged back into debt. Since then, it’s only got worse. And worse. And worse.
Since the Albanese administration took the wheel in 2022, they have unceremoniously tossed the fiscal rule book into the nearest shredder. Our current treasurer, Jim Chalmers – a man who fancies himself an architect of a ‘new’ capitalism – has steadfastly refused to tether the budget to any meaningful numerical constraints. Even the profligate Wayne Swan, once humoured the notion of fiscal rules, however fleeting his acquaintance with them proved to be. One cannot help but lament the loss of disciplined oversight: luminaries such as former Reserve Bank governor Philip Lowe and former treasury secretary Martin Parkinson had explicitly counselled a surplus-first approach. Alas, their sage advice was discarded with the same casual disdain one might reserve for a stale sandwich.
“We’re not attracted to the government’s tax cap, and the reason we’re not attracted to it is because it seems to us like quite an arbitrary cap imposed for political reasons rather than good economic reasons.”
This dismissive sentiment from our treasurer captures the zeitgeist of the current Treasury bench. The coalition’s sensible cap of 23.9 per cent has been treated as a mere suggestion, promptly exceeded while the government continues to wallow in the red. We find ourselves in an era of grotesque bloating: government payments, which languished under a quarter of GDP prior to the pandemic, are now ballooning toward 26.8 per cent. We are witnessing an expansion of the state to a degree unseen outside of wartime or national health crises. It is a peculiar sort of triumph, surely.
As One Nation’s Victorian candidate Mark Nicholson recently pointed out, we don’t have a revenue problem – the government is taxing more than ever – we have a spending problem. A spending problem approaching one trillion dollars.
Government expenditure has exploded past the $800 billion mark, leaving the pre-Covid figure of $500 billion looking like a relic of a frugal, bygone civilisation. Much of this gargantuan appetite for spending is funnelled into the ‘care economy’, which in practice means importing more Third World doctors and nurses and buying more luxury cars for Middle Eastern NDIS scammers in Western Sydney. To suggest, as the budget papers do, that future spending growth will magically taper to 0.7 per cent or 0.9 per cent is to inhabit a realm of pure fantasy. As the saying goes, pigs might fly, and they shall likely be well-fed by the taxpayer. Even the recent attempts to rein in the NDIS – rebadged as ‘Thriving Kids’, because what politician doesn’t love posturing, ‘Won’t somebody please think of the children!’ – smacks of the same cosmetic tinkering that has defined this ministry.
“Every single economic statement that we have handed down has had savings.”
Our prime minister’s earnest declaration is, quite frankly, a work of fiction that would make Hans Christian Andersen blush. This is little more than sophisticated accounting sorcery. When one peels back the layers of this budget trickery, the reality is far bleaker. As the economist Saul Eslake has astutely noted, the net addition Labor has inflicted upon the budget sits north of $100 billion. The government’s talk of ‘reprioritisation’ is a farce, akin to a socialite boasting of their fiscal prudence because they selected the Tesla Model 3 over the BMW, while the estate itself falls into receivership.
While the battlers at the kitchen table wrestle with the indignity of mounting mortgage rates and the relentless inflation tax, Labor remains preoccupied with left-wing vanity projects.
It seems a lifetime has passed since Peter Costello held the fiscal reins, maintaining a standard of stewardship that our current custodians seem utterly incapable of comprehending, let alone replicating.
