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Have you noticed that, as practised by our two main parties, politics has always been about the good news, never anything nasty?<\/p>\n
Talk to the Liberals and they\u2019ll promise to cut taxes. Talk to Labor and they promise more spending on this or that desirable cause.<\/p>\n
The Libs never say how they\u2019ll pay for the tax cut; Labor never says how it will cover the cost of higher government spending.<\/p>\n
It\u2019s the job of people like me to point out the not-so-nice things the pollies don\u2019t want to mention in their sales pitch, but I\u2019m embarrassed to admit I\u2019ve been absent without leave on the simplest of points.<\/p>\n
There was a time not so long ago when politicians and their audience were obsessed by worries about debt and deficit. We probably overdid it, but that was sooo yesterday. These days no one mentions the budget deficit.<\/p>\n
If Treasury is worried it\u2019s kept its concerns to itself. But on Monday a former Treasury secretary, Dr Martin Parkinson, expressed his worries to the Australian Financial Review. (Sometimes I wonder if part of the role of retired senior public servants is to say what those who haven\u2019t retired aren\u2019t allowed to say in public.)<\/p>\n
\u201cI\u2019m quite concerned about the approach to fiscal sustainably by all sides of politics,\u201d Parkinson said. \u201cIt\u2019s almost like debt is not an issue for anybody any more because the concern dissipated during the COVID crisis and nobody\u2019s ever refocused on it.<\/p>\n
\u201cThe government is under no pressure to accelerate a return to fiscal sustainability in part because the Opposition is threatening to do things that are even more damaging to the economy.<\/p>\n
\u201cAnd what is, supposedly, our now new third party of government is on a pathway that is utterly irresponsible on both migration and spending.\u201d<\/p>\n
He said that where we are in the economic cycle meant we should be running big budget surpluses, and yet we\u2019ve got a deficit.<\/p>\n
The budget papers project a cumulative deficit of $264 billion over the five years to 2029-30, with no sign of surplus on the horizon. The deficit seems to slowly get a bit smaller, but this comes from an optimistic assumption that certain spending programs will be allowed to end rather than be renewed.<\/p>\n
Now, Australia\u2019s net government debt at present isn\u2019t all that high relative to other countries, particularly the US debt. But it would be nice to keep it that way.<\/p>\n
Nor am I implying that debt is a bad thing. Wisely used, it\u2019s a good thing. So no one\u2019s saying we should have a balanced budget.<\/p>\n
Just as it makes sense to borrow to buy a house rather than rent while you save enough to buy one for cash, so it makes sense to borrow much of the cost of building roads and bridges and other infrastructure that will deliver a service for 30 or more years into the future.<\/p>\n