Jenan Taylor
21 June 2023
Federal and state governments need to take brave steps to make a major difference to society, experts say.
Reining in unnecessary spending, raising taxes, but lowering public expectations could also help lift the economy, and living costs.
Speaking at an Archbishop’s Conversation about the use of public money Grattan Institute chief executive Danielle Wood said the government was spending more than it was making.
Expenditure on defence and infrastructure, as well as health and disability care had escalated, and was putting rising pressure on the spending side of the budget, Ms Wood said.
She said while the Reserve Bank’s interest rate hikes aimed to curtail inflation, the federal government ought to also use other ways to manage fiscal challenges, including reviewing its tax base to increase revenue.
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That would entail changing the community’s mindset, since public expectations of government spending had increased and created a disconnect with fiscal policy over the last decade, Ms Wood said.
Melbourne University Institute for the Future of Business executive director Phil Dolan was the other panel participant.
Mr Dolan said putting spending projects through independent rigorous cost benefit analyses before they took place, and using sunset clauses should be essential.
But he said the federal government might also consider increasing GST.
The problem with making that change was that it would result in a trade-off where there were winners and losers, Mr Dolan said.
That required politicians to be brave about things, but there was usually timidity among policymakers, he said.
Mr Dolan would consider spending on education if he was treasurer, while Ms Wood said she would focus on increasing job seeker payments and support for aged care and disability.
But Ms Wood said in terms of current expenditure many bad decisions had been made.
“They’ve been extraordinarily costly. We should put some controls in place so that we stop doing stupid things,” she said.
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