TAX AND SPEND LIBERALS

Economist and LibertyWorks advisory board member, Darren Brady Nelson, has a few piercing comments on last night’s budget.


The former Republican President Ronald Reagan used to pejoratively refer to the Democrats in the 1980s as “tax-and-spend liberals” with a lower-case “l”. Last night Treasurer Scott Morrison in his 2017-18 Budget speech clearly earned the moniker for himself and the Turnbull Government of “tax-and-spend Liberals” with an upper-case “L”.

On the tax side of the ‘tax-and-spend’ ledger, there was a recycling of the “enterprise tax plan” which one can barely call a real tax cut with a straight face. The rest of the Budget’s tax initiatives were tax increases semi-disguised using such language as “levy” or 1984 double-speak as “reversing” and “reversal” of “savings”. Levies, for instance, were mentioned ten times. And not mentioned, of course, as removals or decreases.

On the spending side of the ‘tax-and-spend’ ledger, a plethora of Budget expenditure initiatives were mentioned. These were usually couched as the ‘motherhood’ term that “infrastructure” is nowadays or once again semi-disguised using 1984 double-speak such as “invest” or “reinvest”. Investing, for example, was highlighted more than two dozen times. Infrastructure was referred to eleven times. No mention was made of any significant expenditure reductions of taxpayers’ money. Instead, more-and-more spending of taxpayers’ money is now ‘sold’ to voters as “infrastructure” that can be paid by future generations as so-called “good debt” rather than “bad debt”.

Given that no major additions to revenue nor any major subtractions from expenditure have been flagged by the Treasurer, it does not seem likely that the Budget will “return to balance in 2020–21”. Despite pretentions to the contrary, “[i]t does … pretend to do things with money we do not have” and “we [can] pass a burden and forsake our obligations to the next generation”. This is because all hopes seem to be placed on being the ‘lucky country’ that, instead of “making the right choices” for “growing our economy”, simply “succumb[s] to the laziness that thinks growth will take care of itself” based on questionable “signs of an improving global economy”. Real and sustained economic growth will require rekindling the spirit of National Competition Policy from the 1990s as well as radically reducing taxes, regulations and money inflation as the USA and UK promise to do.

Treasurer Morrison also discussed at some length about ways of tackling, reducing or otherwise “putting downward pressure” on the high and rising cost-of-living in Australia. Key amongst these were in the areas of energy, banking and housing. These areas are indeed key, but timid window-dressing measures which only treat the symptoms but not the causes, will not get the job done. Too much bad regulation is the main cause, which drives prices up in these areas. Such regulation is also known as red, green and blue tape. Red tape gets one mention by Morrison, and not in the context of the cost-of-living, where the Treasurer somewhat vaguely asserts “we will take further action to reward States and Territories that cut red tape costs for small business”.

There is one line in particular by Treasurer Morrison that sums up how this Budget is in a ‘galaxy far far away’ from being “responsible”, “credible” or “honest”. It is that housing “prices are higher where demand is greater than supply”. No kidding, Sir Humphrey. What should have come next was how governments at all levels for more than a decade have been artificially boosting demand and restricting supply. In particular, the federal government has boosted housing demand through loose monetary policy whilst state and local governments have curtailed housing supply through tight regulatory policy. The Reserve Bank of Australia (RBA) plays a central and destructive role in the former (eg quantitative easing, fractional reserve banking and the four pillars policy) and the anti-human environmental fundamentalists in the latter (eg green tape, green taxes and green subsidies). The RBA also plays such a role in banking, as do the environmentalists in energy.

The annual Budget week should be renamed National Handout Week, where the corridors of Australian Parliament House are at their fullest with expectant ‘baptists and bootleggers’ looking to happily dip into the pockets of hard-working taxpayers, non-crony businesses and over-burdened consumers. This process is not only unethical but is uneconomic. It proverbially ‘shuffles around the deck chairs on the Titanic’ on the way to ‘hitting’ the fiscal and economic ‘iceberg’. This is most typified by the lack of real policy solutions to the underlying causes of the cost-of-living crisis, which Morrison and Turnbull continue to be largely mute on. Morrison, in fact, signals the opposite in housing by stating that “on demand management, we will continue to prefer the scalpel to the chainsaw, to avoid a housing shock”. Worse still perhaps than such economic vandalism is the anti-freedom attitude revealed by him saying “[t]his is a Budget that makes the right choices for Australians” – ie “makes for” not “makes with”, “makes on behalf of” or “makes by the consent of”.

In closing, as President Reagan once said: “In this present crisis, government is not the solution to our problem, government is the problem.” This is as true in these times and in this country, as it was in Reagan’s America of the 1980s.


Darren Brady Nelson is an Advisory Board member of LibertyWorks and an economic policy advisor to Senator Malcolm Roberts.

3 Comments on "TAX AND SPEND LIBERALS"

  1. Nice one Darren…best bit: “Worse still perhaps than such economic vandalism is the anti-freedom attitude revealed by him saying “[t]his is a Budget that makes the right choices for Australians” – ie “makes for” not “makes with”, “makes on behalf of” or “makes by the consent of”.”

  2. Great budget…. for the Labor party.

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