There certainly should be, given the nation’s increasingly dire fiscal outlook and the decline of Australia’s decade-long resources boom.
Even the extra billions of dollars in revenue raked in every year via bracket creep can’t keep pace with Canberra’s old spending commitments, let alone the new ones bound to emerge at next week’s budget.
It’s a depressing time for anyone hoping to wrench Australia away from shuffling mindlessly down the path to European-style economic sclerosis. But voters could be persuaded for some tough economic medicine, if only our political leadership would rise to the challenge.
It turns out around four times as many Australians would prefer the government to cut spending as opposed to increasing taxes to fix the budget, 57 per cent to 13 per cent, when presented with the basic fiscal facts.
That’s according to a survey of 1000 Australians commissioned by the Institute of Public Affairs earlier this month and carried out by independent polling outfit Dynata. Only 15 per cent opted for “no change – debt isn’t a problem”.
It won’t be a shock that only 29 per cent of Canberrans wanted cuts, but it might be that calls for a little “austerity” were greatest in Victoria (59 per cent) and Tasmania (62 per cent), the two states that face the greatest fiscal challenges.
The surprises didn’t end there. Asked whether government overall in Australia was too big, too small or about right, 45 per cent opted for too large and only 11 per cent for too small, which is about the same primary vote as the Greens.
It seems voters have the right intuition, even before either side of politics begins to make the case for more expenditure sanity.
Donald Trump and Elon Musk deserve credit for highlighting waste in the vast US government, which hasn’t been exposed to a proper efficiency review since the early years of the Reagan administration.
Musk’s Department of Government Efficiency has turned up some amusing examples, such as $US20m ($31.56m) for an Iraqi Sesame Street, $US59m on luxury hotel stays for illegal immigrants, and even $US1300 each for 25 coffee cups for the air force.
After trawling through thousands of US government contracts across dozens of departments and agencies, DOGE reckons it’s found around $US115bn in savings.
Musk still has a long way to go to reach his target of $US1 trillion, let alone find enough to close America’s gigantic annual budget deficit, which is easily double that. But his admirable efforts have reminded Americans just how bloated the government can become without regular scrutiny.
In Australia, a similarly determined effort could easily find spending ripe for pruning.
My own cursory examination of new measures introduced over the past few federal budgets reveals $38m to “increase diversity in STEM education”. There’s $22m for a First Nations Digital Support Hub, and $56m to establish a “Building Women’s Careers program to drive structural and systemic change”.
DOGE found that Washington’s USAID had been funding LGBTQ+ programs in Uganda and transgender operas in Colombia. Our own foreign aid arm, once dubbed AusAID, now under the auspices of the Department of Foreign Affairs and Trade, will almost certainly be a source of similarly absurd expenditure programs.
It recently launched a New International Gender Equality Strategy, which aims to “prioritise gender-responsive and inclusive climate action on mitigation, adaptation and response … and promote disability equity and rights and LGBTQIA+ equality”, according to the DFAT website.
One can only imagine how these programs must go over in traditional developing countries, such as Indonesia and Papua New Guinea. Maybe a security pact with China would be preferable for Solomons Islands to a moral lecture from DFAT bureaucrats!
In fairness, closing small programs piecemeal here and there won’t be enough to bring public finances back to a sustainable path, even if such cuts would help restore some much-needed integrity to public spending after the crazy Covid years.
Serious savings will require making serious inroads into health, welfare and the National Disability Insurance Scheme, which in a few short years has become as expensive as Medicare and the Pharmaceutical Benefits Scheme combined.
Other Western governments have successfully made the political case for drastic spending cuts in the past, such as Sweden and Canada in the 1990s, which both had to slash vast chunks of their welfare states as they teetered at the edge of economic collapse.
Argentina is going through a similarly painful adjustment period now under President Javier Milei. Since World War II Australia has never had to take the axe to spending to the same extent, but the longer we wait the more painful the adjustment will ultimately be. The revenue tide is bound to go out in the coming years, exposing the unsightly wreckage of social programs unaffordable outside the boom years.
For all the reluctance to talk about cutting spending, these post-Covid years may actually be the opportune time to advocate for less intrusive and profligate government.
In the same survey mentioned above, the IPA also asked Australians what they blamed for the surge in inflation since 2021: lockdowns, government spending, big business, or foreign conflicts. The first two potential causes attracted the most answers, a combined 56 per cent.
Only 13 per cent opted for foreign conflicts, which politicians around the world have typically tried to blame.
The voters in our survey have a better understanding of our true economic position than politicians give them credit. They are just waiting for one of the major parties to rise to the challenge.
Adam Creighton is chief economist at the Institute of Public Affairs.
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Listening to the two major parties a few days out from the budget, you’d think there is no significant constituency in this country for cutting government spending.