“The Henry review of the tax system, and the Rudd Government’s response are being released when federal spending is at the highest level in 25 years and revenue is at it’s lowest in 16 years…” reports George Megalogenis in the Weekend Australian. Slasing spending and broadening the revenue base would appear to be the most logical response to the contradictory forces of recoverey with deficit and population growth with ageing.

“Rudd is the first Prime Minister since Whitlam who is increasing government spending as a share of gross domestic product. ”

Last weeks deal with the states regarding hospitals and health, while on paper appears to be a centralist move bringing more control to the federal government, but the Prime Minister broke the pattern of every federal takeover since Whitlam’s government by leaving a significant amount of power with the states. The cash moved but the responsibility for the system did not.

“canberra will write the majority of the cheques for public hospitals and provide all the money for primary, GP and aged care. the 30 per cent of the GST that helps pay for this reaffirms federal financial authority. But the state’s will get to decide how Canberra’s GST health money is spent and the GST itself , won’t cover the entire cost of Canberra’s burden.

The assumption in the package is that federal spending must increase in real terms. Even the extra 5.4 billion in cashover four years that Rudd used to bring the Labor Premiers and Chief Ministers to the finish line adds to the size of government. Smokers will pay for the sweeteners. The Hawke-Keating model would have found the savings within the health budget.

the Rudd model doesn’t take things off voters to give them something better in return. the hope is to contain costs in the hope that the quarry will do the heavy lifting back to surplus.”

Source: Weekend Australian – Focus