In appointing Stephen Kennedy as the Treasury Secretary, the government selected the bureaucrat behind Turnbull’s potentially disastrous carbon tax. He was also a player in Kevin Rudd’s spendathon following the 2008 global financial crisis; unsurprisingly he has gone for a “Full Ruddy” stimulus, contrary to Treasury’s former role as being the Praetorian Guard over politicians’ spending ambitions.
Australia’s spending now totals $320 billion, 14 per cent of GDP and among the most irresponsible in the world.
The stimulus effect will be ineffective but the resultant debt will be a Sword of Damocles hanging over the economy, squeezing the availability of investment funds for decades. Countering this with clearing away regulatory detritus is essential if we are to restore income-enhancing growth.
As for paying back the $320 billion debt and easing consumer cost impacts, we have the option of rescinding many policies that continue to slug the economy. Three of these are:
- The Murray Darling Basin Plan, which has reduced farmers’ irrigation water by some 20 per cent. Cancelling remaining funds and re-selling the water lost to agriculture would provide some $7 billion, a massive dividend in restoring the prosperity of the region, while boosting national food production.
- The renewable energy program comprising Commonwealth budget spending at $1.6 billion a year on energy subsidies through the waste from program acronyms like CEFC, ARENA, GCS; and the consumer imposts through renewable energy regulations at $2.7 billion a year. Over 10 years, terminating these programs saves $43 billion.
- Abandoning the diesel retrofit of the French nuclear submarine – a choice designed to appease greens, that was originally to cost $50 billion but is now $225 billion. A sensible alternative would save at least $100 billion.
Will a government that has to date proved unable to wind back excessive regulatory spending or resist arguments from its advisers for excessive spending prove capable of such reforms?
A full version of this is in The Spectator here