It might be time to increase the GST to 15 per cent. Photo: Quentin Jones
Like British grimebusters Kim and Aggie from How Clean is Your House?, Australians have called in the experts to deal with the mess left by the previous tenants.
The Rudd/Gillard governments spent recklessly and piled on the debt - and Australians knew it. The decision to change government on September 7 owed much to a sense that Labor had lost any sense of fiscal husbandry; a damning failing in the eyes of a generation of voters more sensitive to the sustainability of government spending than any since the Great Depression.
If you want the nation's budget cupboard put in order, the Coalition has the men and women for the job. They are the proven performers. There is now a fairly predictable rhythm in Australian politics: Labor governments pump up deficit spending and debt, Coalition governments pay down debt and foster surpluses. There have been few departures from this pattern, at federal or state level, in the past two decades. Like the child in a separated family, the Australian taxpayer seems doomed to shuffle back and forth between an indulgent parent and a strict one.
At least the political rhetoric has converged: both sides talk up surpluses (remember Wayne Swan's triumphalist-if-premature declaration in 2012 that Labor had ''achieved'' a surplus?). But the signs are clear that it will prove harder to convincingly subscribe to the rhetoric in coming years. The truth is government spending, in nations the world over, has become the mythological Hydra, growing more heads with every attempt to cut it down. And overcoming it may be too Herculean a challenge even for a muscled-up Coalition.
Labor was a spending junkie, even more addicted to spending at the end of its life than at the beginning. It comprehensively failed every restraint-based ambition it set itself; for example, despite solemnly committing in its final budget to limit real spending growth to 2 per cent, it actually increased spending by 8.6 per cent, one of the biggest annual splurges since the Whitlam government.
Its most diabolical legacy to the Liberal Party, however, is not runaway deficits. It has complicated the task of attaining surpluses by embedding a string of commitments that will be eye-wateringly costly to deliver in full: the national disability scheme, the national broadband network and school funding reforms in particular.
The extent to which these reforms have been successfully booby-trapped into the political landscape was illustrated by the new government's short-lived attempt to cut back on Gonski-based payments to the states for their schools.
In fact, federal budget spending is projected to remain above 25 per cent of gross domestic product for this and the next three financial years, and frankly the task gets no easier at that point.
Pitifully few developed countries have been able to make real cuts to government outlays; in fact, the trend is powerfully in the opposite direction. The ageing of the population only makes such reform harder, since the proportion of the electorate dependent on welfare transfers is growing inexorably.
It is true the Howard government achieved the rare trifecta of restoring surpluses, boosting growth and paying off debt, but even during the heyday of its belt-tightening, from 1996 to 1999, it was increasing spending in real terms by more than 2 per cent a year.
The Abbott government is attacking this roadblock with vigour. Instead of relying heavily on the lazy device of levying efficiency dividends, it has begun to identify and defund programs and agencies it simply does not believe, on first principles, are affordable
any longer. This initial pruning will be followed by a second run over the target via the audit commission later this month, and again in March.
But there are practical and political limits to how far the Coalition can travel down this road. Although there are some areas of government where excess and featherbedding are still evident, in others bureaucratic capacity has withered significantly as a result of Labor's cuts, with implications for the delivery of the government of the day's agenda. Yes, there is still some fat to cut, but a lot of flesh will be hacked away in getting to it.
There is also a social price to pay for some of this slashing (cuts to overseas aid spring to mind). Abolishing whole programs and agencies provides an immediate bounce to the budget bottom line, but many a baby could be saved from the bathwater if the time and trouble to restructure rather than eviscerate was preferred.
I believe the gap between what we expect to pay for as a nation and what we can afford will be the unbridgeable gap of this generation. And that must lead to consideration of expanding the tax base.
Labor, through a combination of dishonesty and ineptitude, gave expanding the tax take a bad name, but this government will need to approach the same issue sooner or later. The obvious candidate is increasing the goods and services tax to 15 per cent, but the execution of this must be light years from the style of recent attempts.
Too tall a task? Perhaps. But the alternative is intergenerational debt and deficit, and who wants to be telling their grandchildren about that?
Gary Humphries, a former ACT Liberal chief minister and senator, is now a lobbyist.