Aversion to Surplus
In the midst of the Global Financial Crisis and the rapid increase in spending by the Federal Government, I wrote at the time that Australia’s long run of budget surpluses had come to an end and to prepare for a ‘decade of deficits’. At the time, it seemed impossible to most people.
Unfortunately the 2018 Federal Budget has confirmed this and worse. Our deficit has averaged $35 billion per year over 10 years and we now have around $350 billion in net debt. A tiny surplus $2 billion unreliably forecast for 2021 would need to be repeated more than 175 times to clear this massive debt, and this debt does not include the overhang of the NBN (yet) or other supposed commercial ventures of the Government including rail lines and the Snowy Hydro upgrade. No wonder former Treasurer Peter Costello has said we will be dead before this debt is repaid.
Australia has had almost 27 years of economic sunshine without a recession. Our public finances are bloated and lazy. We spend more money for poorer results (NDIS ‘beneficiaries’ saying they are getting poorer support, education, health, energy costs, poor quality immigration, belated infrastructure causing us all to lose time and efficiency). We are not paying our own way and have little to show for the spending that exceeds revenue. While we have been able to ride on the coattails of our forebears, our legacy is a debt to future generations. We raise around $440 billion per year and about one-third is given away as welfare, and need to borrow more to pay for the rest of our excessive expenditure including to pay the interest on the debt accumulated around our necks.