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Governments will eventually have to play hardball with debt dodgers

Peter Switzer
19 October 2022

Normal people might have lived through the strangeness of the Coronavirus with its lockdowns, masks and restrictions pivoting to online purchasing, zoom meetings and learning to exercise in their garages. And now they might be working a hybrid life between home and the office and even living with higher pay in a tightening jobs market.

Yep, lots of people’s lives have changed post-pandemic but it looks like the majority of normal people have come out of Covid with a new and often improved life, unless you have run a small business in the CBDs that are less populated, or if they have debts because of the lockdowns and other business-killing aspects of the virus episode of 2020-22.

Many businesses are now coping with making a new business model to fit these pivoted post-pandemic times, carrying debts that can be challenging. I know this isn’t a usual request but spare a moment of compassion for the governments and their leaders, who were given a daily challenge of beating the virus, keeping their economies going, dealing with the complaints and coming up with the money to make it all work.

Now they have to beat the debt that these Covid-fighting policies generated. In NSW, Premier Dominic Perrottet has a billion dollars’ worth of debt owed to him by many of the people who he wants to vote for him in the 25 March election.

Interestingly, Labor Opposition Treasury spokesperson Daniel Mookhey says the money must be collected and implies he will be the tax collector if they get the government gig next year. Meanwhile, it’s hard for the Premier and his Treasurer Matt Kean to play hardball with many people, who could be still under a lot financial pressure, when you are down in the polls.

Of course, after the election, whoever wins will start raising the stakes on those in debt to governments right around the country, as this wouldn’t be just a NSW problem.

So who are the debtors that have driven unpaid debts 171% higher to over $1 billion? Have a look at this table from the SMH and Revenue NSW.

How did it happen, apart from the malingering tax or fine dodgers who always try and game the system?

As the SMH’s Lucy Cormack explained: “The Perrottet government granted tax deferrals and reductions throughout the pandemic in response to the financial burden of COVID-19 lockdowns.”

Daniel Mookhey has told us why the next NSW government will have to stop playing Mr Nice Guy. “Every dollar of uncollected taxes results in more debt and higher interest payments. NSW literally can’t afford a government without a strategy to collect this money,” he said.

For the most part, the money will be collectable for an important reason.

“COVID-19 affected customers’ ability to pay tax and almost all of Revenue NSW’s tax debt recovery is personalised, to ensure the customer is at the heart of the process in finalising debt owed to government,” a spokesperson from State’s revenue department revealed.

I guess Dominic doesn’t want to bankrupt business and households, especially before an election. But one day after March 25 the State’s debt collectors will come calling in NSW, and in time, debtors in other states won’t be spared either.

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© 2006-2021 Switzer. All Rights Reserved. Australian Financial Services Licence Number 286531. 
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