Not that much to treasure



Australian Financial Review

13th July 2006


Liberal senator Mitch Fifield's strong support of Treasurer Costello (Costello can become a PM to treasure, 12 July) is not surprising given that he worked for him and obtained pre-selection with Costello's backing.


However, his assertion that the latter is a great treasurer becomes somewhat suspect when one examines his claim on changes in taxation and spending under the Costello treasurership.


Contrary to Fifield, Australia's tax to GDP level has not declined over the last ten years.


Historical data on the Australian Bureau of Statistics web site shows that the total tax to GDP proportion increased from 28.3 per cent in 1994-95 (the last full year of Labor) to 31.5 per cent in 2004-05, equivalent to an increase in tax take of over $28 billion.


Further, while Fifield is correct in saying Australia has the eighth lowest OECD tax level, he omitted to mention that the 2006 OECD Factbook also shows an increase of nearly two percentage points of GDP.


Fifield's claim that spending has declined also requires heavy qualification.


Whether looking at spending by all governments or simply by the commonwealth, discretionary spending (that is, excluding interest costs) has increased. The Treasurer's claim to the contrary in The Age on 27 March has no valid or meaningful basis because it did not compare like with like data.


Let us hope that whoever is Coalition Treasurer in the future will do something to honour the avowed belief in small government.