Earlier tonight, Wayne Swan and Kevin Rudd brought down their third budget and taxpayers should be scared.
Terry McCrann hit the nail on the head this morning. He outlined that this budget was driven by pure politics -creating the illusion of financial responsibility.
As well as seeing continued growth in government debt, government spending continues to grow out of control and taxes continue to increase.
In his first budget two years ago, Wayne Swan said:
“We are budgeting for a surplus of $21.7 billion in 2008-09, 1.8 per cent of GDP, the largest budget surplus as a share of GDP in nearly a decade” and “The Government believes there is an economic case for cutting government spending.”
Even measured against their own words, this Budget is a failure.
This Budget confirms that Kevin Rudd and Wayne Swan are addicted to spending and refuse to take the tough decisions necessary to get Australia’s finances back on track.
MASSIVE INCREASES IN SPENDING
The Labor Government cannot take any difficult decisions – its profligacy with taxpayers’ money continues. It has not taken a single tough decision to rein in its reckless and wasteful spending.
Spending in this Budget will increase by $26 billion over the next three years relative to last year’s record spending forecast and it continues to grow rapidly in future years.
SPENDING BLOWOUTS
Labor’s reckless approach to Australia’s finances has seen massive blowouts.
Offshore asylum seeker management has blown-out by a massive $777 million since last year’s Budget. This blow-out in offshore management costs has occurred at the same time as Kevin Rudd walked away from his commitment to universal offshore processing.
The home insulation disaster continues to cost Australian taxpayers unbelievable amounts of money. This programme is the most monumental failure of government policy in living memory.
The Budget confirms that Kevin Rudd’s home insulation disaster will cost at least $1 billion to fix, with thousands of homes across Australia still not inspected in the aftermath of the scheme’s cancellation. The Home Insulation Programme which has been linked to four deaths and resulted in 240,000 dangerous and dodgy insulation jobs, 1,000 electrified roofs, and 120 house fires, will now cost the Budget a further $1 billion.
…AND TAX INCREASES ARE HERE TO FUND IT
As we heard last week, the Kevin Rudd wants to slug our most important export sector.
The Government’s $9 billion a year mining tax will damage the sector of the Australian economy which did the most to see us through the Global Financial Crisis.
Already this reckless decision has resulted in BHP casting doubt over the $20 billion expansion of Olympic Dam, Santos deferring a decision on a $15 billion LNG export-terminal in Gladstone, Xstrata suspending a $30 million regional exploration programme, and Origin Energy predicting increases in domestic energy and fuel prices.
The Labor Government is taxing Australians at record levels to fund its spending binge.
DEBT CONTINUES TO GROW
While the Government would prefer to talk about its illusory surplus in three years, the truth is that debt continues to grow.
In coming years, the Labor Government will borrow over $700 million a week to fund its reckless and wasteful spending. This will continue to put upward pressure on interest rates and the cost of living for Australian families.
Interest payments also continue to grow to fund this debt. Interest on net government debt will be $4.6 billion in 2010/11. By 2012/13 the Government will be spending $6.5 billion a year on interest payments.
AN ILLUSORY SURPLUS
The government’s claimed surplus is an illusion, based on rubbery forecasts.
At a measly forecast $1 billion in 2013-14, it represents less than one third of one per cent of government spending.
The improvement in the Budget’s fiscal position is a direct result of a growing economy and assumptions about record high terms of trade combined with tax hikes on miners and cigarettes and an attack on private health insurance.
Kevin Rudd and Wayne Swan are asking the Australian people to trust them to deliver a Budget outcome that is based on the most favourable terms of trade in 60 years, assumes a significant increase in investment in resources and assumes no new additional Government expenditure between now and 2014.
BUT GOVERNMENT ADVERTISING CONTINUES TO GROW
In an undisguised election campaign strategy, the Government will spend $126 million on print, radio and television advertising, including:
- $30 million for another climate change advertising campaign;
- $38.5 million over two years to advertise the outcomes of the Henry Tax Review despite only adopting a handful of the Review’s 138 recommendations;
- a new $29.5 million advertising campaign to sell their health package even though Western Australia has not signed on and all new beds won’t even be delivered until 2013-14;
- $16 million over two years, including $7.6 million in the current year, on an NBN advertising campaign.
AND A FEW INTERESTING TIDBITS…
CUTS TO DEFENCE
Labor’s Budget cuts the number of uniform personnel by 500 while increasing civilian numbers by 1,500.
UNION EDUCATION FUND
Continuing past form from the days of the Hawke and Keating Governments, the Government gives $10 million to the Trade Union Education Fund.
This is another big taxing, big spending Labor Budget with no serious reform. Only the Coalition can bring discipline to Australia’s finances.