Budget 2014: Fixing Labor’s mess

Labor’s economic policy

Giving any Left-of-Centre party the reins of government is like giving Dracula the keys to the blood bank.

Firstly, they spend like there is no tomorrow, and when they run out of money, they just put up taxes and/or borrow more, which eventually cripples the economy and bankrupts the government. It never gets to that stage of course, because the electorate, who generally appear to have very short memories, vote them out at the last minute and leave the fiscal conservatives to clean up the mess.

This has been going on for decades. In the UK in the 1970s, then Chancellor Denis Healey famously said he wanted to tax the rich “until the pips squeak” (although he denied it later). At one point, the highest rate of income tax was 98%. Just think about that for a minute – over a certain (admittedly high) threshold, for every pound you earned, you would get two pence. The rest went straight to the government’s coffers.

Little wonder that Margaret Thatcher, who followed the Labour government of which Healey was a part, said that the trouble with socialism is that you eventually run out of other people’s money.

Nothing changes.

Here in Australia, during the six chaotic years of the Rudd – Gillard – Rudd again government, fiscal prudence was kicked into touch. Whilst acknowledging the existence of the GFC, and the need to respond to it, Labor pissed money up the wall on a scale never before seen. $46 billion on the NBN? Worked out on the back of an envelope. Pink batts? Ditto. Who cares? It’s only other people’s money after all.

When the majority of the electorate saw the writing on the wall, and that the Australian economy was heading into a black hole, they voted in a Coalition government to clean up the mess. Cheers. Thanks for that. No wonder Labor never learn, they never have to do the dirty work themselves.

The Coalition were foolish to claim before the election that there would be no tax increases, given the massive size of the deficit, and now they are having to employ some rhetorical gymnastics to avoid claims that the debt levy is a broken promise. But it has to be done. It always amazes me that Labor and the Greens cannot work out the simple rule that you can only spend what you receive. Wayne Swan (World’s Best Treasurer™) would get into debt every time he passed a Two-Dollar shop.

My advice to the Coalition is to remind everyone why we need a debt levy, is to call it what it is, a Labor Levy.