by Ross Womersley,
CEO of the South Australian Council of Social Service
Before we go attacking or defending tomorrow's State Budget, I wonder if we could think more deeply about the broader context.
Inevitably, the Budget debate (like all Budget debates) will be characterised by announcements of new initiatives which may or may not be good, but which hide the real day to day expenditure of government. There will be claims of “the biggest taxing Budget ever” (which applies to almost every government simply because of inflation and growth), and there will be the self-interest of groups who (genuinely but sometimes unhelpfully) believe that what is good for their sector/industry is good for the state as a whole.
But beyond the Budget announceables, South Australia has a looming revenue problem, and the Government, and indeed the public, is yet to come to grips with this issue.
I’d like to see a reframing of the terms of the debate to include the level of services we as a community want, as well as how to raise the revenue to pay for vital public infrastructure and services.
Economics is full of different theories, costings and assumptions – and when they get into a government’s budget there is a political fight as well. The result is that amidst all that we actually fail to have the debate we need to have about where to spend our tax dollars and the level of taxes and services that we as a community want.
As part of our new tax report, we surveyed1,000 South Australians who told us that they want to pay less tax but get more services.
The report also highlights a number of popular tax myths circulating. None of these help us in understanding whether the budget or a government policy is a good or bad deal – and for who.
Over half the respondents to our survey thought that SA taxes were higher than elsewhere. But per head of population our state taxes are the second lowest in the country, and as a proportion of the state economy taxes are below the national average.
Many people also believe that if the government stopped wasting money we would have lots more money for services. Eliminating waste is important, but when asked for examples most respondents highlighted big infrastructure projects.
While this probably underestimates the importance of such infrastructure to the public good, the numbers don’t add up either as none of these projects on their own make much difference to the tax needed or to the services that could be provided.
Some of us also hope that economic growth will save us from having to make hard budget decisions – and while it is true that economic growth does increase the amount of some taxes collected, it is not straightforward. The last budget showed that in the next few years overall tax revenue would decrease despite forecast economic growth.
We need to have a different debate if we are to address the economic problems confronting our state. We could begin by agreeing three basic parameters for the budget debate: that SA is not highly taxed comparatively; that we spend more as a proportion of the total budget on health, education and community services than any other state or territory; and if we demand more and more expensive services we will need increased tax revenue to pay for them.
From there, we can have a proper debate about the services we want, the budget priorities, and how we will pay for them.
On Thursday SACOSS will be looking beyond the headlines to see what is happening to revenue and expenditure in the long term and whether we will be able to deliver and pay for the services we will rely on into the future.