Treasurer Scott Morrison has warned debt could balloon to $1 trillion over the next decade.
IT WAS Scott Morrison’s “banana republic” moment today when he issued a blunt economic warning which pulled up just short of advocating panic.
We have too many people living off taxpayers’ money and not enough taxpayers, the Treasurer said in a speech.
“There is a new divide — the taxed and the taxed nots,” is how he put it to a Bloomberg function in Sydney.
It was “an earnings problem”, the Treasurer suggested with a strained semantic distinction. Previously he had denied the Budget had a “revenue problem”.
Opposition Leader Bill Shorten was unimpressed and accused Mr Morrison of “blaming elsewhere” and not acting like a government minister.
“Mr Morrison has got to stop chucking tantrums and blaming everyone else and focus on his day job,” Mr Shorten told reporters.
“This is a government of first-class whingers and bunglers and they have to stop being unhappy since the election and get on and do their day job.”
In May, 30 years ago Treasurer Paul Keating told a shock jock: “If this government cannot get the adjustment, get manufacturing going again, and keep moderate wage outcomes and a sensible economic policy, then Australia is basically done for.
“We will end up being a third-rate economy … a banana republic.”
What happened next was “the recession we had to have”.
Scott Morrison wants to avoid that sequence, and what he called a “burning platform”, sector jargon for panic action as an economic structure collapses in flames.
“The next generation will know how well and how quickly we answered these questions by the Australia we leave them, by how much debt they will have to repay, by the taxes they will be forced to endure and the standards and access to services they are able to afford, and therefore have to accept,” he said.
“My greatest concern is that we end up answering these questions too late and the hard way.
“There are some who seem to wish for a burning platform to bring about the changes that are necessary — as occurred in other jurisdictions, such as Europe and the UK, but I am not one of them.
“I do not want my kids to know what a recession is and everything that goes along with that.”
The Treasurer said a generation of Australians had grown up without the pain of economic recession, but had also grown used to welfare being “a common and expected component of their income over their entire life cycle”.
“On current settings, more Australians today are likely to go through their entire lives without ever paying tax than for generations,” he said.
“More Australians are also likely today to be net beneficiaries of the government than contributors — never paying more tax than they receive in government payments.
“There is a new divide — the taxed and the taxed nots.”
The speech was part of the scene-setting the government and the Opposition have engaged in preparation for the return of Parliament next week.
Almost all of the May 3 Budget has yet to be passed and economic debate will dominate debate in the remainder of the year.
Mr Morrison defended one of the Budget measures — changes to superannuation laws which reduce tax concessions — and vowed he would not bow to pressure from Labor or his unhappy backbench.
“The retirement phase accounts remain tax free,” he told a questioner at the event.
The Treasurer said 99 per cent of people with account balances of less than $1.6 million will remain “absolutely in the same situation”.
He said of the superannuation changes in the May Budget: “I certainly have no intention of revisiting them.”