A national think tank has offered the Turnbull government options to return the budget to a surplus two years early.
In last December’s mid-year budget review, Treasurer Scott Morrison pushed back the timing of a surplus by a further year to 2020/21.
The Committee for Economic Development of Australia says successive governments have promised to return the budget to surplus but this is yet to eventuate.
“No economic problem in Australia is graver than the persistence of large budget deficits,” CEDA national chairman Paul McClintock says in new research that aims to balance the budget by 2018/19.
“The particularly concerning aspect is that we have had continuous deficits, eight years in fact, during a sustained economic expansion.”
Mr McClintock released the report during an address to the National Press Club in Canberra on Tuesday.
It shows pushing out the timing of a surplus by a year resulted in a further 2.5 percentage point rise in net debt by 2025/26.
The mid-year economic and fiscal outlook forecast gross debt would be $647 billion by 2025/26 compared with just under $420 billion now.
“Prolonged deficit penalises today’s youth and future generations, who will end up paying for current spending despite Australians being wealthier than they have ever been,” Mr McClintock said.
The CEDA report offers various combinations to cut government spending by $2 billion annually and raise revenue by $15 billion to achieve a balanced budget by 2018/19.
Revenue raisers include halving the capital gains tax discount, raising taxes on luxury cars, alcohol and tobacco by 15 per cent, and making the flat 15 per cent flat tax concession for superannuation contributions a 15 per cent discount on a saver’s marginal tax rate.
Among its proposals on the expenditure side, it calls for a reduction in drug prices under the pharmaceutical benefits scheme and a 10 per cent cut in assistance to industry.
Mr McClintock says these options are “realistic and politically palatable”.