It's a Fine Line between Illusion and Delusion

By Davidson, Sinclair | Review - Institute of Public Affairs, January 2011 | Go to article overview

It's a Fine Line between Illusion and Delusion


Davidson, Sinclair, Review - Institute of Public Affairs


All the spin in Canberra can't disguise the fact that the Gillard-Rudd government have yet to make a single policy decision that reduces the size of the deficit, argues Sinclair Davidson.

Julia Gillard recently made the comment that the present government has a record of savings - they have ?saved' $80 billion over their budgets. That is an extraordinarily misleading statement.

Writing in The Weekend Australian the normally mild mannered Peter van Onselen said the $80 billion saving ?isn't spin, it's bullshit.'

While we haven't quite gotten to ?Freedom is slavery', doublespeak is alive and well and flourishing in Canberra.

The government have been able to achieve that ?saving' of $80 billion by increasing taxes and by shuffling money in the out years of the budget process. They have failed to undertake any savings that the general public would recognise as being a saving. The current federal government have not reduced their expenditure by $80 billion. In fact the current federal government have never reduced their expenditure by a single dollar.

When the Rudd government came to office in late 2007 the budget was in surplus. In the 2008 budget the government forecast an increased surplus-yet by 2009 had realised a budget deficit. Since then the budget has been in deficit -despite the $80 billion savings.

You probably didn't realise it, but you are a tax-serf. All your income and property and wealth really belongs to the government. It is only through their generosity that you are allowed to keep some of your income. So when the government lets you keep less of your own income (raises taxes) that is a saving to the government. When the government lets you keep more of your income (lowers taxes) that is spending.

Of course everyone knows that government spending is bad-so never lower taxes. Saving is good; so raising taxes is good.

Treasury produce a reconciliation between budget forecasts and budget outcomes. The difference between the two is divided up into policy decisions and ?parameter variations'. Policy decisions are those decisions made by the government during the year that have the effect of changing revenue and spending outcomes relative to what the budget indicated. Parameter variations are changes in world conditions and in forecast errors and the like that result in different outcomes to what the budget indicated.

The present government have yet to make policy decisions that reduce the size of the deficit. This is a government that routinely spends more money than it taxes. …

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