Whose Money is it?

Are you enjoying your hamster-wheel yet? Would you like another carrot cube?

(TMR)

If we didn’t allow our federal government, its agencies and quangos to become so big in the first place, we would not be debating the need for a federal ‘integrity’ commission. We also wouldn’t be funding a museum to house Julie Bishop’s stinky used shoes (yes, really).

Unfortunately, our federal government is the biggest game in town and it’s been acquiring extra influence and power for some time.

Federal government spending

Don’t believe me?

Here’s a federal budget pop-quiz for you: when was the last time the federal government spent more than 25% of GDP for 7 years running?

The answer, of course, is never… until now (see pages 11-5 and 11-6).

(Note: I’m assuming here that the federal government will have no trouble in meeting its 25.4% and 25.0% spending ‘targets’ for the 2018-19 and 2019-20 financial years).

GDP Graph

‘Government Warming’

Just stop and think about the above:

  • Before even a single cent is coerced out of our pockets by State and Local governments (and their agencies and quangos), the Federal Government hoiks-out a quarter of our productivity*.
  • The current record levels of federal government spending have been achieved under a Liberal government. Now stop and think about what a Shorten-Labor federal government is going to do from mid-2019 onwards…

(*) PS: when you add in what State and Local governments take**, we’re well on our way to being a 50% socialist nation. (Shhhhhh, be cool man).

(**) PPS: sorry, but 2016-17 is the latest available data available for this. Yes, that’s the ABS giving yet another ringing endorsement for government efficiency.

Federal government revenue

Still having trouble believing me about how big our government has become?

Then, how about we change over to the tax side of the equation and compare the increase in government revenue with the average wage for the last 15 years?

To be ‘fair’, you will see that this analysis includes the years in which government revenue decreased during the GFC.

Firstly, let’s look at the Federal Government’s revenue for the last 15 years:

  • Government receipts 2003-04: $217.8 billion
  • Government receipts 2017-18: $445.1 billion
  • Average annual increase over 15 years: 4.9% (or 4.88% for those handy with a scientific calculator) (Note: the average over the last 10 years has been 4.3%).

As for average wages, I’ll illustrate this one graphically and let you decide whether you think our wages have risen by more or less than 4.9% over the same time:

WPI

Wages

Trying to get people to absorb the true state of our federal finances – and the impact it is having on their everyday lives – is no easy task. That said, I’m hardly surprised given the advent of:

  • PAYG/PAYE tax – where people are divorced from their money from the time they earn it, such that they think it was never theirs to begin with (it’s ‘the government’s’ – just ask Kelly O’Dwyer for example).

Just imagine how different things would be if people went back to paying their tax in arrears. What would people think of the government’s big spending projects and welfare payments then – if they had to physically hand their money over to the government themselves like any other bill?

The fact is that most people are now so enamoured with ‘getting by’ and ‘the cost of smashed avocado sandwichesliving’ that they are completely apathetic to how the political system is being run and, more importantly, what is happening to their hard earned money.

Make no mistake, the government is getting bigger and we are getting smaller – and we’re allowing it to happen. The problem is that, when people become apathetic, they become controllable… and fungible.

First comes ‘intervention’.

Then ‘regulation’.

Then ‘protection’, ‘support’ and ‘democratic socialism’.

After that, all that’s left is a complete takeover.

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41 Responses to Whose Money is it?

  1. .

    An interesting measure is real per capita GDP growth; perhaps real, per capita disposable income growth.

    The cost of debt and government is cutting into labour demand and living standards.

  2. Roger

    We also wouldn’t be funding a museum to house Julie Bishop’s stinky used shoes (yes, really).

    Trigger alert, please.

    Keep the Cat a safe place.

  3. Comparing federal government revenue with wages is pretty disingenuous, seeing as wages have lagged behind productivity and GDP growth for unrelated reasons. How about comparing it with GDP instead?

    Also, I hope you didn’t just compare a change in nominal values with a change in real values.

  4. .

    Comparing federal government revenue with wages is pretty disingenuous, seeing as wages have lagged behind productivity and GDP growth for unrelated reasons. How about comparing it with GDP instead?

    You miss the point monty. The government is not only wasteful, but interest payments are now sucking demand out of the plebs. You and other socialists NEVER acknowledge how costly taxation is, even in direct terms, let alone deadweight loss.

  5. .

    Also, I hope you didn’t just compare a change in nominal values with a change in real values.

    Price index

    % of real GDP

    monty, you’re not up to this, go away.

  6. Speedbox

    This was the final line from my post in another thread. I think it is also a relevent inclusion here:

    Anybody not making plans for the protection of their family and their wealth from the cold dark hand of an all pervading Leftist government in Australia is, IMO, either naive or irresponsible.

    Seriously folks, if Shorten and Co are elected next year (and in particular if they hold both Houses), all bets are off and the tax/spend machine will be turbocharged.

  7. Government receipts 2003-04: $217.8 billion
    Government receipts 2017-18: $445.1 billion
    Average annual increase over 15 years: 4.9% (or 4.88% for those handy with a scientific calculator) (Note: the average over the last 10 years has been 4.3%).

    The two figures for government receipts are nominal, not real.

  8. .

    Are you sure monty? Are you sure they don’t have the same base year?

    Are you sure there is a significant difference in the rate of increase between the real and (?) nominal figures?

    Let’s say there is. Why shouldn’t we include inflation?

  9. Alex Davidson

    Unfortunately, our federal government is the biggest game organised crime syndicate in town…

    I think it’s time we called a spade a spade. Much of what the government engages in is the very definition of theft – taking without consent. With all the fuss being made over consent in the setting of ‘inappropriate behaviour’, surely it’s time we turned the consent spotlight on the government. Many of the things the government does to the lifters in society are done without their consent, and cause them a great deal of harm.

    The same standards should apply to the government as they seek to apply to us, especially “Thou shalt not steal”.

  10. stevem

    Make no mistake, the government is getting bigger and we are getting smaller – and we’re allowing it to happen. The problem is that, when people become apathetic, they become controllable… and fungible.

    Not True. Look at the outrage that a small budget cut generates. We’re (as a total population) not allowing it to happen, we’re demanding it happen. As 50% of the population are now net welfare recipients the push for greater spending will increase until the whole house of cards comes crashing down.

  11. max

    Gary North:

    “You Can’t Beat Something with Nothing”

    This is a fundamental law of politics. It applies equally well to theological debate. A critic who challenges the worldview of a rival needs to present a developed, workable alternative. It does no good to label a rival theological position as deviant, heretical, peculiar, and so forth unless your own position is specific, comprehensive, and practical.

    I do not see any Blueprints, show us Blueprints.

    thanks.

  12. I looked it up, Dot. You should try that some time, it’s very educational.

    Government revenue increases are driven to a large part by inflation, population growth and GDP growth. Pretending that they aren’t is innumeracy.

  13. Rebel with cause

    Depressing stuff Marcus, it’s like bashing your head against the wall trying to get the public interested in this.

    Low taxation, free markets and the rule of law are minority positions. People that support these things need to accept they are in a tiny minority, and the only way they will have any influence is to pursue these goals with absolute ruthlessness.

  14. .

    monty “looked it up” and spewed out an insult.

    Now monty, tell us what the data actually was – no prevarication; you looked it up, after all.

    If you’re up to it, tell us why inflation isn’t a tax as well, as well as if the growth rate either deflated or with the control variables taken out is different at all.

    [I’m not even sure that you’re right monty – see this:

    http://www.abs.gov.au/AUSSTATS/[email protected]/Lookup/5506.0Explanatory+Notes12016-17

    REVISIONS

    “15 GFS data are revised on an annual basis. For this reason differences can occur between equivalent aggregates published in earlier years.”]

    Now, why would prior years be revised monty, possibly in each year of publication?

  15. max

    Rebel with cause:
    “People that support these things need to accept they are in a tiny minority, and the only way they will have any influence is to pursue these goals with absolute ruthlessness.”

    you mean like in USSR from The October Revolution till 1991, or like Mao,Hitler…

  16. monty “looked it up” and spewed out an insult.

    Don’t get your back up, I wasn’t accusing you of anything upthread.

    But you are very, very lazy.

    Now monty, tell us what the data actually was

    Case in point. Look it up yourself.

  17. Chris M

    Thank you Marcus, a very important and informative post.

  18. Warburton

    Not True. Look at the outrage that a small budget cut generates. We’re (as a total population) not allowing it to happen, we’re demanding it happen. As 50% of the population are now net welfare recipients the push for greater spending will increase until the whole house of cards comes crashing down.

    Sadly, I suspect stevem is right. Otherwise great article–we need to be constantly reminded of just how much money the federal government churns through.

  19. .

    monty looked at the data and cannot categorically state if it is real or nominal.

    It’s like Homer Paxton is back.

    The idea that government spending should automatically increase with GDP, population and inflation is just demented.

    GDP goes up – less need for welfare.
    Inflation – so what, unless you have a massive army of public servants.
    Population – we are spending more and more and less on physical infrastructure. Spending 100 mn to assess 75 mn of actual road construction is a joke.

  20. The idea that government spending should automatically increase with GDP, population and inflation is just demented.

    The idea that pensions should drop just because the population increased is just demented.

    Inflation – so what

    No wonder you went into law. Economics was obviously too hard for you.

  21. .

    No wonder you went into law. Economics was obviously too hard for you.

    Listen shithead, I have a first, you failed economics 101.

    I will keep on pointing that out everytime you rise above your station in life.

    Now inflation is an issue at all, what does that mean, monty?

    You’re trying to say it is a cost, but no one pays for it? You’re a fucking charlatan.

  22. mh

    Just imagine how different things would be if people went back to paying their tax in arrears. What would people think of the government’s big spending projects and welfare payments then – if they had to physically hand their money over to the government themselves like any other bill?

    Joe Hockey introduced sending out the breakdown of Fed government spending with NOAs. I doubt many people look at it, but still worth a try.
    Payment of tax at the end of the financial year without any pre-payments would mean most taxpayers would end up in payment plans with the ATO, so not much would change.

  23. struth

    GDP……………………………….here we go again……………………………..
    A complete socialist’s measuring stick taking in government spending!!!!!!!

    What this shows us is what we can already see out in the real world.

    Australia, without government spending is grinding to a standstill, and when that spending finally stops, which it has to, Hello Venezuela………………………………

    Immigration boosts government spending when you bring people into a socialist shithole with no real private sector boom.
    That ain’t a good economy, that’s the very worst scenario.
    And our private sector is dying, yet the socialist Liberals point to GDP!

  24. Leo G

    monty looked at the data and cannot categorically state if it is real or nominal.

    I expect the revenue growth to be shown in real dollars, but the wage growth to be in nominal dollars.
    The ABS wage price index is adjusted for seasonal factors but not including CPI. The index is used in estimations of inflationary pressure.

  25. .

    Too bad, I almost thought I could get monty to say:

    1. Inflation is, in fact, a problem, it is also an implicit tax.
    2. It is intentionally caused by government and policy.
    3. Keynesian policy aims are to apply a deferred implicit tax to reduce purchasing power to artificially clear markets.

    Probably another 25 years before he starts living off an annuity before he realises how much of an issue this is…

  26. Rococo Liberal

    Maybe there is a reason why so many of us who are self-employed are right-wing. We do have to pay our taxes in arrears from our receipts. And we pay a lot.

  27. Rebel with cause

    you mean like in USSR from The October Revolution till 1991, or like Mao,Hitler…

    Imagine the brutal assault on freedoms that would occur if the Government insisted you should be able to keep more of your own money. Oh the horrors!

  28. thefrolickingmole

    Imagine the brutal assault on freedoms that would occur if the Government insisted you should be able to keep more of your own money. Oh the horrors!

    All those tradies buying boats and new cars, dont those bogans know their place!

  29. H B Bear

    The simple change of paying tax retrospectively to the government and having to write a cheque to the ATO would probably convert 50% of the population to the Conservatives.

  30. Boambee John

    m0nty
    #2874171, posted on November 28, 2018 at 12:21 pm
    I looked it up, Dot. You should try that some time, it’s very educational.

    Government revenue increases are driven to a large part by inflation, population growth and GDP growth. Pretending that they aren’t is innumeracy.

    The lackey of the fascist left is too young to remember the election speech in which Saint Gough promised to fund his election promises by using wage inflation to push taxpayers into ever higher tax brackets (and they went a long way up in those days).

    Inflation is theft from the prudent.

  31. cohenite

    Government revenue increases are driven to a large part by inflation, population growth and GDP growth. Pretending that they aren’t is innumeracy.

    The troll ignores the elephant in the room which is why government revenue should go up at all.

  32. Dr Fred Lenin

    Whats the problem ? All money belongs to the people who govern us , they print it dont they? .we can trust these carefully selected people to do the right thing cant we .?
    People of the calibre of turnbull. Pyne scomo banks shortass pillsberserk , as I say carefully selected , dont know by whom ,but I say “not guilty yer onner “ !

  33. Rockdoctor

    thefrolickingmole
    #2874342, posted on November 28, 2018 at 3:03 pm

    LOL Mining Boom. Scary thing is I have met blokes like these parodies… They are out there & they vote…

  34. Mak Siccar

    Marcus, thank you for this succinct yet comprehensive analysis that is guaranteed to induce depression in any thinking person, given that the number of patriotic and altruistic politicians in Australia could be counted on one hand, and consequently, the situation is unlikely to improve in the foreseeable future. Politicians of all stripes like to spend our money to make themselves look good. I just wish that they would spend our money as if it were their own in the (probably vain) hope that this would be done prudently. Naive, I know.

  35. H B Bear

    LOL Mining Boom. Scary thing is I have met blokes like these parodies… They are out there & they vote…

    They were parodies?

  36. Robber Baron

    Looking at your first chart Marcus, it appears that Whitlam was an economic conservative.

    The chart proves that no government program ever stops being funded.

  37. Squirrel

    “Unfortunately, our federal government is the biggest game in town and it’s been acquiring extra influence and power for some time.”

    Let’s hope what remains of the Liberal Party uses its next stint in opposition to develop some detailed, ready-to-go policies on reducing the size of federal government – particularly regarding the duplication of functions which are properly the role of State and, in some cases, local governments.

    As to the ruby slippers, shouldn’t they just return from whence they came – the Wizard of Oz Museum…..?

  38. .

    I think ABS Cat 5512.0, Table 000 is the most instructive.

    From the tab “Table_1”

    All levels of government
    Total GFS revenue
    2016-17, $m

    607,834

    —————————————————

    All levels of government
    Total GFS expenses
    2016-17, $m

    (624,337)

    — — — — — — — — — — — — — — — — — — —

    As our population in 2017 was 24.6 million, that’s over 25,379 AUD spent on or “by” each of us each that year, with at least that much debt owed by the Federal government alone.

  39. classical_hero

    The record tax receipts in America prove it’s not a taxation problem but a spending problem.

  40. classical_hero

    HBB, my Father works in the reprocession industry and the time after the financial crisis had many former miners and such lose everything because they assumed the good times would last.

  41. classical_hero

    When Australia goes into a recession it’s going to get ugly and could become a depression.

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