Joe Hockey: budget reform in Australia is possible only after a crisis — ABC News Australia
Former Australian treasurer Joe Hockey said that, in his view, substantial budget reform in the country will become possible only in the event of a financial crisis. In an interview with The Business, he said that voters would not support measures if they cost them money, ABC News Australia reports.
Hockey, who served as treasurer in Tony Abbott’s coalition government, believes that people agree to unpopular decisions only when they feel an acute need for them. He also said that governments do not restrain spending because they are focused on re-election.
Criticism of government spending
According to Hockey, governments are willing to spend as much as is needed to remain in power. He linked this to the fragmentation of the political landscape: parties have to compete for the votes of individual voter groups.
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The former treasurer also drew attention to a trend in developed countries, where social payments may exceed revenue from income tax — the largest source of government revenue. He added that the United States also cannot keep increasing borrowing indefinitely in the hope that the problem will disappear on its own.
Debt and deficit
Current treasurer Jim Chalmers, speaking at an Australian Financial Review event, also spoke about rising debt and deficits around the world. He noted that political power is now more effective at blocking or distorting change than at delivering reform.
Earlier this week, Chalmers presented the seventh intergenerational report, devoted to the difficulties of achieving a balanced budget in the long term. It states that in 40 years Australia’s population may reach about 40 million, while the country will have higher debt and probably a persistent budget deficit. The factors cited include an ageing population, rising spending on healthcare and aged care, as well as a smaller share of workers.
