OPINION: A proper solution requires an honest conversation

Leading up to their first budget Tony Abbott and Joe Hockey yelled from the rooftops that Australia had a spending problem, not a revenue problem.

It’s the excuse every member of the Liberal government used to justify their first budget, which was soundly rejected by economists and the Australian people.

It’s the simplistic approach to a complex issue that saw $80 billion cut from schools and hospitals, $6,000 a year cut from the typical Australian family, and $80 a week cut from Australian pensioners in the 2014-15 budget.

It’s the narrative that saw business and consumer confidence plummet, deficits over the forward estimates balloon, net debt rise to its highest ever point, and Joe Hockey’s credibility crumble.

And it’s exactly what Scott Morrison said on his first outing as Australia’s new Treasurer.

Scott Morrison talks about wanting a better debate about the fiscal challenges facing Australia, but first he needs to accept responsibility for his involvement in the debacles of the last two years.

Furthermore, while he talks about fiscal challenges, he refuses to properly and honestly define what these challenges are.

Both sides of politics want to see the budget return to balance and Labor has always been open to responsible and sensible savings.

But Joe Hockey and now Scott Morrison have argued there’s only one way to return the budget to balance: that’s to take a razor to expenditure.

While savings can always be found, Labor fundamentally rejects this simplistic argument. You don’t crack a nut with a sledgehammer. Australians have seen in Joe Hockey’s first budget what happens when a government tries to slash and burn its way to prosperity.

Over the forward estimates the budget faces cumulative deficits of $82 billion; trying to simply cut our way out of this is not the answer.

The IMF has said Australia’s expenditure is low compared to other advanced economies and a return to balance needs to consider revenue measures.

As Ken Henry has rightly pointed out, in 2002, the last time the budget was in balance, both receipts and payments were around 25% of gross domestic product.

Since, receipts have fallen to 23.5% of GDP and payments have increased to 25.6% of GDP; receipts have declined by more than double the increase in payments according to the most recent Final Budget Outcome.

To argue Australia doesn’t have a revenue problem is to ignore reality and frankly is downright concerning from someone who holds the position of treasurer of Australia.

A return to balance requires reducing expenditure over the medium term and reviewing revenue in a fair and equitable way.

Scott Morrison has invited Labor to submit our ideas about how best to solve the fiscal challenges facing Australia.

This is what Bill Shorten and Labor have been doing and will continue to do right up until election day.

The best example of this is Labor’s approach to tackling the inequality in our superannuation system, where the top 10% of Australians receive more concessions than the entire bottom 70%.

Over the forward estimates the age pension will increase by around 14% in nominal terms, over the same period, superannuation concessions on earnings will increase by 88% to over $30bn per year.

Scott Morrison argues the former is unsustainable but the latter is acceptable.

Tax concessions aren’t free – government effectively spends money to maintain these generous concessions. If they’re kept, it means cuts elsewhere.

Labor’s plan for a fairer superannuation system will reduce the tax concessions available to high income earners and improve the budget bottom line in a fair and equitable way.

In government, Labor introduced the High Income Superannuation Contribution, which lowered the superannuation tax concession for people earning more than $300,000 per year by 15%.

Now, Labor is proposing to improve this measure by lowering the High Income Superannuation Contribution threshold to $250,000, bringing high income concessions more in line with people on average incomes and fairness back into Australia’s superannuation system.

Concessions for superannuation accounts earning more than $75,000 per year in the retirement phase would also be reduced by 15% under Labor’s plan. In its first year this would affect around 60,000 accounts, most with balances in excess of $1.5 million.

If Scott Morrison is looking for a way to prove he wants a serious debate, recognising this as an issue is a good place to start.

Labor is prepared to have a serious debate about the solutions to the fiscal challenges Australia faces and we have, and will continue to, put forward serious policy measures.

The ball is now in Scott Morrison’s court. He can’t claim he wants a serious debate while ignoring basic facts.

This article was first published in The Guardian on Saturday, 31 October 2015.