Dr Parkinson said the government’s budget did tackle the problems that Australia faced, with the prospect of large deficits continuing into the indefinite future. “The policy decisions taken by the government in this budget are projected to restore the budget to a position that is structurally sustainable over the medium term,” he said.
In a speech to a joint ANU-Australian Financial Review conference in Canberra yesterday, Dr Parkinson said the focus of budget repair had to be on the spending side. “It is one thing to argue that reform proposals should be designed with fairness in mind,” he said. “But it is quite another to invoke vague notions of fairness to oppose all reform.
Dr Parkinson said that if budget repair were to focus on spending, it had to be recognised that Australia’s welfare system was highly targeted. “Policy changes will likely have a larger impact on those who receive the most payments.
Despite the introduction of the GST in 2000, Australia’s dependence on direct taxes was as great today as it was in 1950 and was high relative to other OECD countries. “Without conscious change, the economic cost of raising tax from our current tax mix will increase,” he said.
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