Friday, 2 May 2014

For the sake of $16.41 billion the Abbott Government is going to start a class war?

In the 20 years since the last ­thorough review of the Commonwealth government, budget spending has more than tripled. [Chair of the National Commission of Audit Tony Shepherd writing in the Financial Review on 2 May 2014]

It seems Chairman of the Abbott Government’s National Commission of Audit, Tony Shepherd, likes to compare the last twenty years when explaining the recommendations of the 2014 national audit made public on 1 May.

So what is the actual comparison? Well it breaks down like this.

In 1994 the Australian population was an est. 17.93 million. By May 2014 the population grew by 23.62 per cent to an est. 23.47 million.
In May 1994 there were 8.71 million people in the Australian labour force. In 2014 this had risen to 12.26 million people.
In 1994-95 all industry multifactor productivity was 108.5. In June 2013 it was 104.9 - a 3.6 point difference.

In 1994 Australia’s nominal Gross Domestic Product (GDP) was an est. $323.41 billion and is an est. $1,577 billion in 2014.
Australian Government net debt reached 24.2 per cent of GDP in December 1994. Net debt reached an est. 11.7 per cent of GDP in 2013-14.

In 1994-95 the Federal Government had receipts totalling $113.45 billion and in 2013-14 total receipts were an est. $392.59 billion.
In 1994-95 Australian Commonwealth government outlays totalled $128 billion and in 2013-14 government outlays totalled $409 billion, which represents a threefold increase over the two decades spanning the last half of the Keating Government, the Howard Government, the Rudd & Gillard Governments and the beginning of the Abbott Government.

In May 2014 the Australian Government total combined net debt and spending is an estimated 38 per cent of GDP.

Basically, Australia’s population has grown and so has federal government spending, while multifactor productivity is lower. However, the gross domestic product has also grown along with the amount of taxes paid and the number of people of workforce age, while net government debt has fallen. 

I honestly cannot see that the $16.41 billion shortfall between money coming in and money going out in 2013-14 is a valid reason for dismantling universal health care and forcing aged pensioners into a below the poverty line standard of living after 2016-17.

Especially if one looks at the numbers Mr. Hockey considers valid.  In 2013-14 Federal Government total payments (spending) are 25.93% of Australia’s Nominal Gross Domestic Product (GDP). By 2023-24 total payments are projected to be 26.50% of GDP. That expenditure growth is less than 0.57% over a decade, while the GDP is projected to grow 5.1% annually over that period.

When one factors in the possibility that reducing corporate ‘welfare’ grants, rebates and concessions would over time reduce the $16.41 billion, it makes the government’s position incomprehensible  to say the least.

However, the Abbott Government attack on the welfare system apparently has less to do with economic reality and more to do with ideology and, no amount of media management by the government will be able to disguise this reality.

Dollar amounts and percentages are based on data found in Australian Bureau of Statistics tables, Australian Parliament briefing papers and Abbott Government documents and reports.

No comments: