Well what else would govts do?
Follow failed wall street perhaps and socialize the losses and privatize the profits?
What do you think created the GFC?
That said, and without any real reform, the govt, can if it so chooses, fix the structural defect, it inherited from the Howard regime, by continuing to roll back completely counter-productive middle class welfare!
The very worst and most counter-productive example, I believe, being negative gearing.
This highly flawed example has not made rents or housing more affordable, just the opposite. Nor has it led to the long longed for decentralisation, just the opposite, along with increasing un-affordability.
This one single example of welfare for the very rich, costs the budget bottom line 5 billion plus per annum.
Repealing this entirely unaffordable govt largesse, would create a reasonable surplus.
As might means testing the fuel rebate, so it actually benefits real farmers and miners, rather than cigar smoking, conyac swilling, bloated, Collins St multi-millionaires; and or, debt laden, tax avoiding foreign speculators/carpet baggers?
After that, what we really need, is a govt with enough testicular fortitude, to repeal all current tax measures and replace all that current convoluted mind-numbing complexity, inclusive of the GST and fuel excise, with a virtually single, stand alone, entirely unavoidable expenditure tax.
Set at around a patently painless 4.8%, an expenditure tax would raise around 25% more NET revenue.
Which given the end of reconciliation or any need for the same, would become immediately available to consolidated revenue!
Thereby enabling the govt to end its need to borrow significant sums, simply to fund inherently unavoidable recurrants, or essential, bared to the bone, departmental activities!
A federal govt, with significantly more revenue, could replace the foregone GST, by simply assuming all funding responsibility for public health and education; and given a direct funding model, actually draw down actual costs, quite massively!
Rhrosty.

Rhrosty, I agree whole heartedly with the general substance of your post. However, the blanket tax you refer to also has its issues.
Would this tax not also skew in favour of the rich? Granted it would encourage saving to a greater degree but here are some possible pitfalls:

- Your tax would favour those with a larger proportion of discretionary spending (spending not required to simply survive)

- I assume your tax would also be on capital items? What about continued investment? Whould it not stiffle grwoth?

- How would a business (or person for that matter) fair through a start up period where expenditure inevitably exceeds income for the short to medium term.

Interestd in your thoughts...

The more we tax the less prosperity there will be for everyone Geoff.

The GFC now has alerted nearly everyone to the obivious.Our private banking system creates money from nothing.Money has no intrinsic worth but it allows us to swap our labour for goods and services.

Banks by creating this money from nothing,own our increases in producivity and loan it back to us as debt.This is why the West is so entrapped by debt and our economies stagnating.

Our Commonwealth Bank from 1911 to 1922 created some of this new money from nothing which kept our taxes low.Income tax came in here in 1915 to pay for WW1 and the USA in 1914.

If our Reserve Bank of Australia created half of the increase in our money supply of 6% pa,we could cut our taxes by $30 billion + interest pa and our private banks would not have to borrow from OS banks who just create it from nothing anyway.

Our banks won't lose out,infact they will gain since our money will stay here and we will own our increases in productivity.

Care to debate this reality Geoff?

This is kind of true Arjay. You only have to look at the gold price. Gold is perhaps the best benchmark we have to measure the value of money. Yes, it does have some small supply and demand factors at play, but as a rule of thumb, we could say that gold is worth the same as it always was. It's only money which is worth less.

The "onwnership of productivity increase" you refer to also has deeper roots. It is not just the private banking sector to blame here. As western economies have gradually deregulated, the debt cycle has been allowed to get ever wider, unabated.

This has led to what is essentially a 'world debt', created by ever increasing promises of something which may not eventuate in the future and is actuallly not underpinned by anything at all

ManoftheLand. The World Dervivative market is 10 times the GDP of the planet.What process created all these worthless derivatives?

Our banks have exposure to $15 trillion worth of derivatives and only a fraction of this is backed by real assets.Why did the Labor Govt borrow billions from China and other OS banks when the RBA could have done it?

Even our inflationary money gets expressed as debt.So the the banking system is stealing via inflation and expresses it as debt to us.It is double theft

Affraid I can't argue with your logic Arjay.
At some point, there will have to be a re-balancing of these systems. This obviously can't go on for ever. I know my father has studied these things for years and he has for a long time predicted another 30's style depression, only far greater and more far reaching, on account of the worlds money markets having a further reach than was previously the case.

Do you see it going this way also?
Is it also likely to be a 30's style sudden collapse?
What would be the likely triggers?
Are there any steps we can take in our country to help insulate us?

ManoftheLand,Yes it is looking worse than the Great Depression.We in Australia can save our economy via the RBA and cutting back on wasteful Govt spending.

Living on a farm makes for better survival.My parents went through the Great Depression on the land and times were tough but they could feed themselves.