Archives for posts with tag: budget

Joe Hockey on welfare spending:

This year the Australian government will spend on average over $6,000 on welfare for every man, woman and child in the country. 

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The government announced in its recent budget that pensions (including the Disability Support Pension and Age Pension) will no longer be pegged to wages. Instead, they’ll only rise in line with the CPI.

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I’ve seen a few suggestions lately (eg. in the Fin) that Australians should envy the New Zealand economy’s performance. Here are a few charts to keep in mind when comparing the two countries.

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Listening to the Treasurer and others, you may get the impression that a blowout in spending has caused a structural deficit. This does not accord with the analysis of the independent Parliamentary Budget Office. I alluded to this in my piece in the Guardian the other day, but I think it’s worth quoting the PBO at length:

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I thought this was a particularly interesting sentence in today’s mini-Budget, in light of the anti-carbon pricing campaign over the past couple of years:

The removal of the carbon tax is expected to lower headline and underlying inflation by less than 1/4 of a percentage point in 2014-15, relative to the 2013 PEFO, which had factored in the previous Government’s policy of moving to a carbon trading system. 

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The Government today appointed its Commission of Audit into the functions of government. The terms of reference are here.

I’d like to take a look at a few of the premises of the terms of reference.

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The West Australian has a scoop today on one possible policy that could emerge from the new Government’s Commission of Audit:

The university education debt of millions of Australians could be sold off under a proposal to be examined by Prime Minister Tony Abbott’s inquiry into the state of the nation’s finances.

In a move that could boost the Budget bottom line, up to $23 billion of outstanding Higher Education Contribution Scheme debt would be effectively privatised under a plan that has already won support in some financial circles.

One proposal that has backing in the financial sector is to convert the $22.6 billion in HECS debt held by 1.6 million Australians into a financial product. In a process called securitisation, the responsibility for HECS debts would be bought by the private sector and then sold to investors.

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One of the key economic policy battles in the first term of any government is to shape the public’s understanding of the previous government. Howard and Costello successfully associated the Keating and Hawke governments not with a massive program of economic liberalisation, but with “Beazley’s black hole,” a supposedly hidden fiscal deficit that was used to justify sharp spending cuts. The first Rudd government could and should have made more of Howard’s failure to make the most of the mining boom, squandering much of the benefit in unsustainable tax cuts, but they failed to ram this message home.

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