Treasurer Jim Chalmers has a “two-tier” plan for spending and tax

“The budget situation is not going to improve significantly over the next 40 years, so we need to think differently,” said Dr. Chalmers on ABC Radio.

“We need to engage the Australian people in a big conversation.

“Think of it this way: the five biggest, fastest-growing areas of spending are the things we really value – the NDIS, aged care, hospitals, defense and now servicing the interest costs on that debt.

“And then we have to find out if we value it, and we do, how do we make room for it structurally in the budget in the long term?

“And I think that’s a conversation that the Australian people need to have, and I’m happy to lead that conversation, but I would encourage people not to think that October is the only opportunity to do that. “

Intangible fixed costs

Excluding temporary pandemic spending, government payments as a share of gross domestic product are expected to average 26.4 percent in the coming decade, compared to 24.8 percent in the decades before the pandemic.

That equates to about $40 billion in higher spending each year.

The Labor government sees most of the major spending pressure as intangible fixed costs.

Therefore, it may be necessary to confront politically sensitive tax and revenue measures by the Albanian government next year to close the fiscal gap.

Dr. Chalmers has previously said he wants the Treasury’s annual statement of tax spending (renamed the Tax Benchmarks and Variations Statement by the previous coalition government) to be more transparent so the public can better understand the distribution of tax relief, including the impact on the future. generations.

He declined this week to defend any economic benefits of the three steps of $20 billion a year in personal tax cuts favoring high earners, as political pressure builds on the Labor government to backtrack on its election commitment.

In June, Finance Minister Steven Kennedy called on the Albanian government to control “significant spending pressures” on disability and elderly care, while proposing a crackdown on billions of dollars worth of tax breaks for the wealthy, such as through pensions and endowments.

The first budget at the end of next month will focus primarily on the implementation of care subsidies from next July, subsidies for cheaper prescription drugs, more free TAFE posts, a cut in electric car tax and investment in cleaner energy.

“The cost of living is going through the roof, wages are not keeping up. That’s also a key concern for us,” Dr Chalmers said.

Tougher decisions may follow in May.

“We don’t see one budget in isolation,” said Dr. Chalmers. “There will most likely be another budget in May, and that is not far away either.

“And so I’m personally looking at a little bit of two budgets for this task.”

Underscoring the fiscal pressures, the government is also poised to lower the Budget’s annual assumption of productivity growth to 1.2 percent from 1.5 percent, which would increase gross public debt by about 2 percentage points of GDP (about $50 billion in today’s dollars ) by June 2033, according to the Ministry of Finance.