Treasury leaders call out Chalmers for not having the intestinal fortitude to do what’s necessary: reduce this country’s massive debt. Isn’t our Treasurer expected to be tough, not just on the people who don’t vote Labor?
It’s one thing to be bagged by a subjective rival but when you get roundly castigated by people regarded as experts in their field, you really do need to think about your failings. This is what Treasurer Chalmers should be contemplating today after two former Treasury Secretaries have looked at the $265 billion worth of deficits over five years and have virtually said: “Not happy Jim. Not happy!”
Former Treasury bosses Ken Henry and John Fraser bothare shocked at the Treasurer’s apparent giving up on reducing his deficits that feed into an ever-growing pile of debt.
Here are the main points from a Budget report from the AFR’s John Kehoe:
- Our federal government debt is close to $1 trillion.
- By 2029-30, it will be $1.25 trillion.
- Interest paid on this debt is the second-fastest growing spending item behind the NDIS program.
- The interest cost is around $30 billion a year.
- Given our low unemployment, the people who know government numbers say we should have falling deficits and even surpluses!
- They say “spending restraint” is needed.
- Tax revenue collected is at 25.8% of our GDP or total national production of goods and services, which hasn’t been since 2000-01 when we had 10 years of surpluses.
- But this is trumped by Chalmers’s spending that’s now at 26.8%, the highest since the pandemic demanded a big spending government.
Ironically, Chalmers’ PhD was on Labor Treasurer Paul Keating, who actually did have the guts to cut spending alongside his Finance Minister, Peter Walsh, who really had guts.
Kehoe reminds us that it’s the 40-year anniversary of when Paul Keating told John Laws on 2UE that if we don’t get our economic story sorted, we could end up like a “Banana Republic.”
This is Keating in his own words in the AFR today: “It took four exhausting years to do, program by program, department by department – while the terms-of-trade shock followed the fundamental reform of the tax system the previous year, 1985 – very large income tax cuts, capital gains, fringe benefits, company tax cuts, imputation, etc.”
In those days, Keating had politicians who supported his efforts to beat down the deficits and inflation that were ruining the economy, a bit like today. In particular, Walsh even called Prime Minister Bob Hawke “old jelly back” because his boss would often bow to the political imperative and sidestep the some of the tougher decisions that Walsh and Keating wanted.
When Chalmers was asked why he couldn’t cut spending like his hero did, the Treasurer told the AFR: “Forty years have passed, our society is different. The demographic makeup of our country is different”.
While that might be true, I’ll tell you what else has changed — the courage of our politicians. In 1998, Prime Minister John Howard went to the polls promising a GST and just won. Now that took guts, Jim — real guts. And with Keating’s and Costello’s reforms, we had 20 years of no recession. No modern economy has done this.
That’s the pay off when your leaders have guts.
