Treasurer Scott Morrison says the government will push ahead with its 10-year company tax cut plan.
IN STRICT economic terms, keeping people alive or in a comfortable lifestyle is not a productive investment.
That’s according to the Turnbull government, who now has to show political dexterity as it tells pensioners and Medicare users that spending on them is bad debt.
The government is keen to point out that not all spending is bad. They actually really want to create ‘good debt’ by spending money on things like roads and bridges, not human beings.
This pea-and-thimble accounting trick would be a consequence of the revision of debt definitions proposed today by Treasurer Scott Morrison.
The objective is to allow Prime Minister Malcolm Turnbull to present himself as nation builder with his name on plaques throughout the continent, but not a contributor to overwhelming Budget shortfalls.
Infrastructure spending wouldn’t be a burden on the Budget if they could pull back on spending in other areas — such as our people.
It would allow our PM to go Mal-the-Builder crazy without alarming the financial markets and the credit rating agencies.
That would be done by removing these outlays from the Budget bottom line. If it contributes to economic performance — such as a road to a port — it is a de facto asset and not recorded as a debt.
So what’s the other spending? That’s the money going to pensions, welfare, Medicare and the like — bad debt.
Economic specialists are beside themselves with excitement over this new adventure in spending toxonomny, but others will give it a more subdued reception. After all, debt is debt, no matter how you classify it.
Labor’s Chris Bowen says Government debt has blown out by $100 billion this year. Take away infrastructure spending and the figure is slightly more palatable.
But then there is that delicate task of telling the beneficiaries of so-called bad debt that looking after them is money down the drain.
This bloodless calculation will be difficult to sell to voters, particularly by a Government not renowned for its light touch.
And particularly if the ultimate political aim is to make the Government look good.
Treasurer Morrison today in a speech said going into debt for recurrent expenses such as welfare was “not a good idea”.
“Investments in productive capital projects provide returns that will be enjoyed by future generations,” he said.
“This is why it is important that we think about these investments in a different way to recurrent spending.”
He and the Prime Minister will have to do better than that.