This morning’s Australian reports on OECD figures showing that:
Over the past 10 years of John Howard’s Government, the personal income tax burden in Australia had risen from 11.7 per cent to 12.6 per cent of GDP.
It does note that these figures are for 2004, before the 2005 and 2006 tax cuts. These cuts should bring the percentage of GDP take back to around the earlier figure, though because of rising GDP spending per person will continue to grow.
Many people have criticised the Howard government’s taxing and spending record – Des Moore’s latest critique should be on the Policy website in the next few days. I’ve been writing another for the Summer issue, focusing on the expenditure side to see just what went wrong.
What’s particularly interesting is the biggest spending area, welfare payments. Though the long economic boom should, in theory, have lessened demands on the welfare system, in fact real per capita spending in the three years ending 30 June 2005 (the latest from the ABS) increased by more than in the last three years of the Keating Labor government.
Partly, this is due to the ageing of the population. We are supporting 20% more aged pension beneficiaries now than when Howard came to office. No government can do much about these trends in the short term (though there have been fiddling at the margins policies designed to encourage people to stay in work longer).
But what really struck me was that large amounts of money are being spent because the Prime Minister, despite being a hate-figure on the left, is actually something of a social democrat, albeit of a conservative kind.
Consider this statement, from a speech in 2000:
Our social cohesion, flowing directly from a quite unique form of egalitarianism, is arguably the crowning achievement of the Australian experience over the past century. Yet this cohesion will be tested if wealth and opportunity can