Fudging the Figures

Letter to the Editor

The Australian

2nd Feb 2007

Finance Minister Minchin claims that between 1995-96 and 2005-06 commonwealth payments have fallen from 25.3 to 21.2 per cent of GDP ("Prosperity is no accident", Opinion, 1 February) and that, even if account is taken of the impact of GST, "the proportion of government outlays to GDP has fallen under this Government".

However, when I was in Treasury in charge of the budget figuring, I tried to compare like with like. If that is done, Minchin should be including the GST revenue paid to the States in lieu of the general revenue grants paid in 1996-97 (and up to the year the GST commenced in 2000-01). As he well knows, this is what the Australian Bureau of Statistics does.

On that basis, total commonwealth payments are about the same proportion of

GDP as in 1995-96 and discretionary outlays (excluding interest) are higher.

Just as importantly, the total Commonwealth tax take has increased by three percentage points of GDP and the Coalition is the highest taxing government Australia has ever had. So much for the Minister's commitment to smaller government.