The Forum > Article Comments > There's plenty to downsize > Comments
There's plenty to downsize : Comments
By Des Moore, published 10/10/2006Peter Costello's latest budget outcome reveals that high spending by the Government is still a dire problem.
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are we at record low levels of unemployment? i don't know. however, what i do know is that the labour market is extremely tight. you can see it through upward pressure on the wage level and the multitude of articles on skill shortages. this would indicate to me that unemployment is indeed at a fairly low level.
ok, so higher wages / employment, progressive tax structure = higher tax revenue that transmutes into an eventual surplus.
Now the thing to remember about this surplus is it is provisioning for a specific purpose. as the baby boomer generation begins to retire the government has to bring on to their balance sheet a superannuation liability of about $70bn. that's a lot of money. and it's a lot of tax.
now i'd rather the government fund a portion of that liability with tax generated from the generation that is set to enjoy the benefits. if we spend up big now on infrastructure and the like, then in 10 years time that burden has to be carried by the current working population who receive no benefit from it.
i think there's a term - 'intergenerational accounting' that explores these sorts of situations. i don't think that anyone could argue that baby boomers have had a hard time of it, and this provisioning ensures that the aging generation are taking responsibility for some of the policy actions over their working lifetime.