Media Releases
Federal Budget 2009
BUDGET MARKS NEW ERA OF BIG GOVERNMENT
The 2009 Budget sees the biggest increase in government spending since Gough Whitlam, according to Centre for Independent Studies’ economist, Dr Stephen Kirchner.
The Australian economy is experiencing a relatively shallow recession by historical and international standards, yet the 2009 Budget shows an unprecedented deterioration in the Commonwealth’s fiscal position.
“The discrepancy between economic and fiscal performance shows that the deterioration in the budget balance is the result of the government’s own spending decisions,” Dr Kirchner said.
“While the government points to declining revenues due to weaker economic growth, it has also increased spending by 2.6 percentage points of GDP this financial year, with a further increase of 2 percentage points forecast next financial year.”
“This is the biggest increase in the expenditure share of GDP since the Whitlam government. Government spending as a share of GDP will reach a record 28.6% of GDP in 2009-10.”
“The government says it will keep growth in real spending capped at 2% per annum in future years, but no government in recent history has shown anything like this degree of restraint.”
“Real growth in government spending averaged 4% between 1971-72 and 2007-08, which excludes the government’s recent stimulus packages.”
“Government spending has increased 13.5% this financial year, an increase unprecedented since the Whitlam government, and will increase by a further 3.9% in 2009-10.”
“Commonwealth net debt will increase to 13.6% of GDP by 2012-13, crowding-out private investment long after the recession is over.”
“Successive Australian governments have failed to address the long-term challenges to the federal budget posed by an aging population. Only major reform of federal spending programs can put the budget on a sustainable long-term footing and avoid higher taxes in the future.”
“The saving measures in the budget only hint at the expenditure reforms that will be required. It remains to be seen whether politicians on both sides of politics have the necessary appetite for further reform,” Dr Kirchner said.
Stephen Kirchner is a Research Fellow at the Centre for Independent Studies and is available for comment.
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