Published on Apr 4, 2016

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The Centre for Economic Development (CEDA) has released a report urging the government to focus on deficit reduction as its primary budget goal.

CEDA National Chairman Paul McClintock AO said Deficit to balance: budget repair options outlined five scenarios to return the budget to surplus by 2018-19.

“Despite promises from both major political parties to return to surplus this is yet to eventuate and on current forecasts, achieving sustained surplus seems implausible,” Mr McClintock said.

“The CEDA report shows that balance can be achieved using measures that will be politically palatable and can gain community consensus.”

At the core of the balancing act is a simple bit of maths – according to the report “the urgent task of closing the gap boils down to devising strategies for raising an extra $15 billion in revenue and reducing expenditure by $2 billion in 2018–19.”

Mr McClintock said not addressing ongoing budget deficits was a great disservice to future generations.

“Current generations of Australians have experienced an explosion of wealth in recent decades,” he said.

“Yet by running deficits during this period of economic expansion we are essentially saying that our increased wealth is not enough and we expect future generations to pay for our spending today.

“In particular, if you are under 30 you should be up in arms because the current situation is completely unfair.

“In addition to the penalty on future generations, as a player in the global economy, running a large deficit means we have no flexibility to respond to unexpected economic shocks.”

Take a bit from here, add a bit from there.  The budget balancing act.

Deficit

Some revenue raising scenarios include:

  • Raising taxes on luxury cars, alcohol and tobacco between 15 to 20 per cent.
  • Reducing capital gains tax by 40 to 75 per cent.
  • Reducing work-related tax deductions to the value of $4 billion.
  • Reducing industry tax concessions by 25 per cent.

Some expenditure saving scenarios include:

  • Cutting 10,000 public service jobs.
  • Lowering PBS drug prices.
  • Cutting private health insurance rebate by 10 per cent.
  • Reducing budgetary assistance to industry by 10 per cent.

To find out more about CEDA’s recommendations for budget deficit reduction, read Deficit to balance: budget repair options