Australians woke up to dire warnings last week about their economic future. We need tough reforms and spending cuts, we’re told, lest Australia head down the path of Greece and end up as an economic basket case.
On the ABC’s AM program, the Australian Chamber of Commerce and Industry’s Kate Carnell called for the abolition of Family Tax Benefit Part B, means testing of the Child Care Rebate and switching pension payments for loans against the family home.
But it was the comparison with Greece that sounded most, as she put it, dramatic.
The Australian Chamber of Commerce and Industry is warning that this is a real risk down the track unless the May budget curbs what it calls “runaway spending” on the aged pension, family tax benefits and childcare.
The chamber’s chief executive Kate Carnell agreed comparing Greece to the outlook for Australia was dramatic and designed to make the government pay attention.
“Well, it is a dramatic comparison, but I think dramatic comparisons are necessary,” she said.
“In Australia today, every day the government raises about $1 billion and spends $1.1 billion, so every day we have to borrow $100 million.
“Everyone can understand you can only do that for a period of time before you go broke really. So we’ve got to start moving the pendulum, we’ve got to start getting the budget back into balance.
“If we start now, the pain will be significantly less than it would be if we waited until we got to the same situation that we’ve seen in some European countries.”
Ms Carnell said Australia can no longer afford middle class welfare such as Family Tax Benefit Part B and the Child Care Rebate.
A key part of the ACCI submission is to review the aged pension and to force retirees who own homes to transform the pension into a loan that would be repaid when the home is sold.
“It seems irrational really for a family home not to be counted when you look at pensioners’ capacity to fund themselves,” Ms Carnell argued.
“For people in multi-million dollar homes that really are keeping those homes for the purpose, I suppose, giving them to their children when they die.”
According to analysts, comparisons with Greece may be a little premature, but there is certainly hard work ahead for Australia’s economic managers, through both spending cuts and tax revenue increases.
