How Should Mr. Tanner Cut Spending?

Finance Minister Lindsay Tanner has admitted that the government has run out of ideas on how to cut spending. Round 2 is up to you, dear readers. Let’s rise up to the challenge laid down by Mr. Tanner,

We would welcome any suggestions or savings proposals from anybody in the general community’.

As a reminder, here’s a paper from the Treasury on how the government managed to piss $272 billion up against the wall this year. They also note with concern that real spending has increased by a whopping 50% in the past ten years despite ten years of strong economic growth and that ‘all other things being the same, higher government spending will reduce economic growth.’

Social security and welfare……$96.5bn

Health……………………………….$43bn

General ……………………………..$32bn

Defence …………………………….$20bn

Education ………………………….$18bn

Transport & Infrastructure ……$10bn

Industry …………………………….$10bn

Culture ……………………………..$6bn

GST payments to States………..$36bn

Total ………………………………..$272bn

Send in your finest proposals, we’ll put the best ones up for a vote and then mail them direct to Mr. Tanner.

30 thoughts on “How Should Mr. Tanner Cut Spending?

  1. i like the LDP proposal for any new spending measure to have a sunset clause.
    and a citizen veto if sufficient numbers petition against a new spending measure.

  2. Is there anywhere I can find a list of current budgetary spending? I found a list of adjustments to the budget since 07/08, but that doesn’t really help.

  3. I just got a vision! A vision of the only things the Commonwealth Government should be involved in. I’m not sure where it came from, but its amazing! Here it is!

    (i.) Trade and commerce with other countries, and among the States:

    (ii.) Taxation; but so as not to discriminate between States or parts of States:

    (iii.) Bounties on the production or export of goods, but so that such bounties shall be uniform throughout the Commonwealth:

    (iv.) Borrowing money on the public credit of the Commonwealth:

    (v.) Postal, telegraphic, telephonic, and other like services:

    (vi.) The naval and military defence of the Commonwealth and of the several States, and the control of the forces to execute and maintain the laws of the Commonwealth.

    (vii.) Lighthouses, lightships, beacons and buoys:

    (viii.) Astronomical and meteorological observations:

    (ix.) Quarantine:

    (x.) Fisheries in Australian waters beyond territorial limits:

    (xi.) Census and statistics:

    (xii.) Currency, coinage, and legal tender:

    (xiii.)Banking, other than State banking; also State banking extending beyond the limits of the State concerned, the incorporation of banks, and the issue of paper money:

    (xiv.) Insurance, other than State insurance; also State insurance extending beyond the limits of the State concerned:

    (xv.) Weights and measures:

    (xvi.) Bills of exchanging and promissory notes:

    (xvii.) Bankruptcy and insolvency:

    (xviii.) Copyrights, patents of inventions and designs, and trade marks:

    (xix.) Naturalisation and aliens:

    (xx.) Foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth:

    (xxi.) Marriage:

    (xxii.) Divorce and matrimonial causes; and in relation thereto, parental rights, and the custody and guardianship of infants:

    (xxiii.) Invalid and old-age pensions:

    (xxiiiA.) The provision of maternity allowances, widows’ pensions, child endowment, unemployment, pharmaceutical, sickness and hospital benefits, medical and dental services (but not so as to authorise any form of civil conscription), benefits to students and family allowances:

    (xxiv.) The service and execution throughout the Commonwealth of the civil and criminal process and the judgments of the courts of the States:

    (xxv.) The recognition throughout the Commonwealth of the laws, the public Acts and records, and the judicial proceedings of the States:

    (xxvi.) The people of any race, for whom it is deemed necessary to make special laws:

    (xxvii.) Immigration and emigration:

    (xxviii.) The influx of criminals:

    (xxix.) External Affairs:

    (xxx.) The relations of the Commonwealth with the islands of the Pacific:

    (xxxi.) The acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws:

    (xxxii.) The control of railways with respect to transport for the naval and military purposes of the Commonwealth:

    (xxxiii.) The acquisition, with the consent of a State, of any railways of the State on terms arranged between the Commonwealth and the State:

    (xxxiv.) Railway construction and extension in any State with the consent of that State:

    (xxxv.) Conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond the limits of any one State:

    (xxxvi.) Matters in respect of which this Constitution makes provision until the Parliament otherwise provides:

    (xxxvii.) Matters referred to the Parliament of the Commonwealth by the Parliament or Parliaments of any State or States, but so that the law shall extend only to States by whose Parliaments the matter is referred, or which afterwards adopt the law:

    (xxxviii.) The exercise within the Commonwealth, at the request or with the concurrence of the Parliaments of all the States directly concerned, of any power which can at the establishment of this Constitution be exercised only by the Parliament of the United Kingdom or by the Federal Council of Australasia:

    (xxxix.) Matters incidental to the execution of any power vested by this Constitution in the Parliament or in either House thereof, or in the Government of the Commonwealth, or in the Federal Judicature, or in any department or officer of the Commonwealth.

  4. 1. kill welfare. why should we pay for for others?

    2. cut back on what the health care system does. let the evolution and natural selection do their thing.

    3. cut back on what law enforcement. “illegal drugs” for one, their choice (apart from under 18, while driving, etc)

    and i could think of a lot more if i bothered

  5. Due to their economic ignorance, Labour’s calculations for future budgets won’t take into account the increased economic harm they have created. And therefore, I’m very worried future cuts may not even be on the cards at all.

    I think Labour’s economic policies have been badly misdirected so far, even worse than the baby-bonus and rebate obsessed Liberal party.
    So what concerns me is I think Labour members don’t realise the long term damage of schemes such as increasing childcare rebates, increasing medicare levy threshold, increasing luxury items taxes. The ACCC investigations into fuel and supermarket industries are disgraceful. And the compulsory fuel price register was aptly described by Fleeced or Mark (I can’t remember) as, “something straight out of Chavez’s Venezuala”.

    Also, as far as I am aware, there are no future plans for futher income tax cuts.
    And there’s no Malcolm Turnball types in their party that I’m aware of.

    So based on their current record I strongly doubt they’ll make cuts in appropriate areas and I’m quite pessimistic.

    The only refreshing news I’ve heard lately was that Resources Minister Martin Ferguson opposed Fuel Watch. However after these details were leaked, he quickly backed down publicly and stated he fully supported Labour’s policy – something which makes me wonder about his personal integrity. Is it really that much of an issue to say you don’t agree with all of your party’s policies?
    Baranby Joyce did it all the time.

    If I remember rightly Ferguson made the excellent point that Fuel Watch will actually harm the poor the most. However Australia’s poor most likely don’t know about Ferguson’s statements or have forgotten them because he publicly backed down.
    IMO, most people in our society would erroneously think something like: “Well fuel watch can’t do us any harm, might as well have it in there”. Therefore, this issue was IMO an excellent media spotlight opportunity for politicians against Fuel Watch to educate the public, showing government interference in markets is harmful. – Now possibly a lost opportunity.

  6. kill welfare

    if you dig deeper into the numbers, you find that the greatest increase in spending has come from social security and welfare. within this sector, the greatest increase is from aged pensions and family support. the welfare available for families with children is truly mind-blowing.

  7. Indeed. Get rid of welfare.

    Immediately end baby bonus and family tax credits and child care rebates.

    All other payments to be phased out over 10 years – in 10% decrements.

    Sell off the ABC and SBS.
    End all subsidies to sports and arts.

    NEVER, EVER, EVER AGAIN use tax dollars to fund sport events.

    Close down the department of climate change, energy.
    Deregulate tertiary education, phase out HECS (subsidies to universities)

  8. Can Lindsay Tanner think of any ways to increase government spending? Somehow I suspect he would not find this exercise so tough.

    Here is a real simple idea. Freeze the level of spending (dollars per capita) in real terms for the next ten years. No spending cuts required to do this, just discipline in keeping extra pigs away from troughs. If they need to put some steel in their backbone then they could pass legislation indexing the tax free threshold automatically in such a way so as to keep revenue flat. A fixed amount of real revenue per capita would encourage them to do some annual budgeting instread of the current scam where they announce annually how much more they want to fleece us.

    In terms of low hanging fruit for here and now cuts I’d take a look at the $10 billion under the heading “Industry”. And stop spending money on the “Future Fund” and invest in some tax cuts instead.

    In terms of aged pensions you could pay pensioners more but still cut the outlay by increasing the qualifying age. You could phase this in as the superannuation generation flows through the demographic. Lock it in now with legislation.

    In terms of unemployment benefits you could abolish the entire outlay if you got rid of minimum wage laws. Buy off the low wage workers with a higher tax free threshold and a growing economy (ignore the bleeding hearts crowd).

    In the areas of health and education we probably need to spend more but not via the government. Higher education and public hospitals should be sold off. HECs for education and a HECs version of medicare could provide transitional funding whilst dealing with concerns about the social safety net.

    However the talk of spending cuts is mostly a distraction. We need more cuts to tax rates irrespective. There isn’t a tax cut in our history that has caused a decline in total revenue.

  9. A radical reorginisation in the federal system of government. Eliminate state governments. They are outdated and irrelevant dinosaurs. Their responsibilities should be assumed – where there is no existing duplication – by either the federal government or by local governments. Local government borders may well need to be expanded in order to obtain scale, for example by merging the City of Sydney with Woollahra.

    This is not a unique idea. It has been addressed in the 2020 summit, among other places. Not only will fatty replication and administration costs be cut, as certain revenues filter through a much leaner system, but actions taken by local councils are likely to be a fairer reflection of the wishes and aspirations of those communities, and thus more democratic.

    My preferred solution is that a fiat currency induced economic collapse will allow us to build a new structure upon a blank canvas. Given that this is unlikely, a gradual but committed winding back of the layers of government is a realistic (although i concede ambitious) method of starting the slow march towards a freer and more libertarian society.

  10. Politcally, capping per capita expenses (even adjusted for inflation) is probably the best bet – as then spending would continue to decline as a percentage of GDP.

    Had the extra growth of the past decade been entirely funneled into tax cuts instead of new spending, we’d be a lot better off.

  11. The idea isn’t libertarian at all (no States). Or it could e entirely libertarian. But…

    I remember a few years back, the democrats were pushing it so the Federal Government could dictate policy and the regions would be mere administrative units.

    State Federal duplication exists because Federal Governments have too much financial powers and simply expand powers as a populist measure.

    I have an alternative idea. It is a bit out there…

    I think a better idea is to have a looser Federalism, where a shire can choose to go it alone as a city-State, form a new State with other Shires or form a regional Government establishing a State level Govenrment and abolishing themselves.

    You would have a) City-States, b) regions and c) States with shires.

    Shires, regions and city-states would have local powers.

    City States, regions and States would have State level power.

    At least in this way we can’t leave the country but we can dump local or State Government as we see fit. With a much reduced Federal role, this would be more democratic and libertarian.

  12. TimR- a point of grammar. It is spelled LABOR. They use this themselves to distinguish from the non-party LABOUR word, to be used by nonpoliticians. Labor certainly is different to the honest labour movement!

  13. PS I think Federalism can stop much wasteful spending. The current overcentralised finance agreements we have gives the Federal Govenrment too much discretionary power to spend on pork barreling with cross subsidised taxpayer’s funds.

  14. Mark,

    At first glance I quite like your idea and will give it a bit more thought. I do not think the average voter would go for it at this point in history, however.

    The realistic end game, for mine, is a minarchist society. I have always thought of the abolition of state governments as a stop along the way.

    Cheers.
    ADM

  15. ADM, First abolish the Federal government- THEN abolish the states! Strong local government is acceptable, but not a state-free central government!

  16. Suggestion#1: Salaries of Politicians
    Each politician costs the treasury approximately $2,000,000 pa. This includes superannuation, overseas holiday junkets (sorry, information gathering tours), postage and other costs for mass mail out of flyers to constituents, accommodation allowance when away from home, travel, travel, travel, etc. I think the figure has built up so much over the years because of the ‘use it or lose it’ mentality to government funded perks.
    So if we subtract the approx $50,000 they would pay in income tax on a $130,000 salary, they would be costing us approx $1,950,000 p.a. Why not drop the figure to one million on the condition that they don’t have to justify expenditure. All pollies get $1,000,000 per year tax free to spend or save as they wish (OK, the PM, foreign secretary and some others of the executive might warrant an expense account).
    It’s hard to imagine any polly daring to cry poor because he or she can’t live on a mill a year, even after paying for their Canberra lodgings (Brendon Nelson apparently lives in a garage while in Canberra) and a score of return flights to their constituency.

  17. Nick, in theory i agree that the Federal government should be abolished first. In practice, I don’t think you could ever sell the idea to the electorate. But I do think you could sell them the idea of abolishing the states, counterbalanced with larger/more powerful local governments.

  18. Suggestion#2: Bulk Billing
    43 billion dollars annually seems a lot of money ($2,000 per Australian) considering many people subscribe to private health cover and are not even in the mix.
    I once read somewhere (sorry, no citation) where there is evidence of people who, when they find they need treatment for a very minor wound (eg. $5.00 spent at a pharmacy for a bandage), would rather utilise the time of their local bulk billing doctor getting the bandage put on for free, and thus save the money for their next beer.
    Why not charge a basic $10.00 per visit. It still would be far less than the true cost but it would keep away all the hypochondriacs and time wasters. For the seriously ill, have a limit of accrued patient payments of say $500.00 per year, after which visits would be free.

  19. Pommy,
    “Revealed: the $2 million MP, the true cost of democracy” The Age, October 30th, 2004, p.1

    Adjusting the figure:
    A. What I did not originally mention was that the 2 mill. covers cost of an electoral office and three staff.
    B. Adjusting the figure for inflation since 2004 would probably cover the cost of an electoral office and three staff.

  20. Remove duplication of health/education by returning those responsibilities fully to the States.

    Abolish the Department of Industry, Department of Communications, Department of Forestry & Fisheries, the Office for the Status of Women and a dozen other little crappy agencies & offices.

    Means-test ALL welfare — including Medicare, public schools, PBS etc.

    Freeze defence spending for two years.

    End the war on drugs.

  21. Simple.

    Abolish all federal taxes on individual and corporate incomes, sales, and any other tax somehow levied on individuals. No point should the federal government ever tax an individual.

    Take a census every decade or half decade. Figure out the relative population of every state.

    Have the federal government then get 100% of its revenue from each state where they each pay a portion in relation to their relative population.

    Have a federal senate consisting of senators appointed to their positions from their state legislators.

    This way a the state governments, in their limited funds, will have a vested interest to keep federal spending under control. See they want that cash for their own programs. Their senators will then keep the federal government in line to some degree. Should a particular state just raise taxes it creates a situation making the other states look more favorable for people to move to. The nature of the system then favors discretionary federal spending and descretionary state spending…. unless some sort of total collusion occurs. This would probably be easier if the states all had smaller populations and there were many more of them. Hell even by county it might actually work.

    2. ???????

    3. PROFIT!

  22. Probably the simplest way of going about this would be to provoke a strike by the entire public service then abolish those departments that don’t cause any inconvenience by doing so.

  23. nice one Jim 🙂

    to tackle the fastest growing areas of spending (family support and pensions), i would like to see the aged pension linked to CPI rather than average wages (it is currently linked to 25% of the median average wage) and childcare costs either abolished (all they do is prop up the profits of childcare centre operators) or at the minimum means-tested.

    Thatcher changed the link between pensions and earnings to link them to CPI. This proved highly effective in reining in spending. Unfortunately the Labour govt re-established the link with earnings. In these days of generous super funding, the aged pension should be allowed to steadily erode in value and be progressively applied to older people.

    I also like Terje and Mark’s idea to provide a tax-free income to the over-65s who remain in work.

  24. I think a tax free income for the over 65s is a neat idea but I don’t recall advocating it. In any case the over 65s already get a higher tax free threshold of about $25k. This was something that Howard introduced.

  25. Riley has the right idea. Local governments should be the only level of government with the power to tax people directly. Higher layers of government should in effect tax lower levels of government. Coupled with giving the local government the power to appoint members to the house of review this would keep central government lean. It would also reward local regions that maintain small governments.

    The structure of the EU gets this part right.

  26. You’ve got Industry and culture. Thats 16 billion right there. Then there is closing down departments by the bushel which makes mincemeat out of the general thieving category.

    Thereafter you voucherise the education budget but with cutting the size of the voucher 1% per month. There may be some way to voucherise the health money as well. Albeit in a two-tier way.

    Its very easy you know. Thats the message we need to get out there. Nobody hurts. Nobody dies. Its just getting a lot of thieves off our backs.

    Those taxeaters will pick their asses off the ground and within 5 years their lives will be normal and they will be making a contribution for a change.

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