Imagine a demagogue playing a game where he needs to become generous with other people’s money. It’s easy – they earn it, and he decides how to spend it. And when they don’t earn enough for all the spending ideas he comes up with, he can borrow on their behalf, and mortgage their children’s future.
Labor governments in Australia have played this game well.
Liberal governments have talked about its dangers, but have also played it well. Former Treasurer Peter Costello ran years of budget surpluses in the nineties but was blessed by the mining boom; spending was still going up. The period was described by economist Chris Richardson as “temporary boom, permanent promises”.
When he became Prime Minister, Malcolm Turnbull assured us he would fix this problem. But now his government is exacerbating it.
Underlying the problem is that the beneficiaries of more government spending are many, the payers few, and everyone has one vote.
More than half of all Australian households receive government cash handouts. More than eighty percent of the population pays less in tax than they receive from the government, after allowing for ‘in-kind’ benefits such as public schools and hospitals. That means less than twenty percent of the population pays for the collective goods we all benefit from, like defence, police, footpaths and street lighting.
We are electing our way to a problem by not insisting that governments reduce spending.
The Liberal Democrats are committed to smaller government, lower spending and lower taxation.
Senator David Leyonhjelm is a Federal Senator for the Liberal Democrats.