SENATOR THE HON PENNY WONG

MINISTER FOR FINANCE AND DEREGULATION

OPINION PIECE

26 November 2012

THE FACTS SPEAK FOR THEMSELVES

TOPICS: BUDGET, ECONOMY

Sometimes the best way to talk numbers is with numbers, and some of the recent commentary around government spending overlooks some key facts.

Fact: Under this Government, spending as a proportion of GDP is 23.8 per cent in 2012-13 and remains at or below 24 per cent over the forward estimates – the longest sustained period of spending at this level since the early 1980s.

Put simply, Government spending is low and hasn’t been this low for a sustained period of time for thirty years.

Fact: Real spending growth has been reined in to an average of 1.1 per cent a year over the budget period under this Government.

And, year-on-year, Government spending under Labor will grow more slowly than it did under the former Coalition Government, whose spending grew an average of 3.6 per cent each year in real terms over their last four years.

In fact, if you want to compare spending habits, in the last Costello budget (2007-08) the Coalition spent around $40 billion. In just a single budget update.

In comparison, since mid-2009, this Government has offset all new spending decisions with savings.

There is no doubt that economic conditions are different today than they were under the Howard Government.

We have seen a global financial crisis, the worst economic conditions since the Great Depression, and continued global economic uncertainty that has seen revenue write downs of $160 billion over five years.

Yet the fact is, since this period, this Government has constrained spending and we are making important reforms that will see the budget remain sustainable into the future.

We are returning the budget to surplus because we believe that is the right thing to do when we have an economy growing at around trend, low unemployment and contained inflation.

And our disciplined approach sees our economy 11 per cent bigger than it was when we came to Government.

Australia’s economy is expected to grow faster than every major advanced economy this year and next.

Fact: We are a lower taxing Government than the previous Coalition government.

Under Labor, tax as a percentage of GDP over the forwards remains below what we inherited – at or below 23 per cent compared to 23.7 per cent when we came to Government.

And, if we had the same tax to GDP ratio as when the Coalition left office, we would have a surplus of $24 billion in 2012-13.

This Government has identified more than $130 billion in savings over the last five Budgets, with a further $16 billion in the MYEFO handed down last month.

This has not been easy. But we are committed to fiscal discipline because we believe it is important to have a strong budget position and ensure it is sustainable into the future.

If you want evidence about the success of the Government’s fiscal discipline, look no further than the fact that interest rates have come down the equivalent of six times since November last year, at the same time that growth is solid, unemployment is low and we have a record level of investment.

And we have made important reforms, including changes to the family payments system and fringe benefits tax, means testing of the private health insurance rebate, reforms to tax offsets and changes to the Baby Bonus; all of which will see the budget more sustainable into the future.

These are the facts. And they speak for themselves.