Australia has the dubious honour of having the fastest budget deterioration of 29 advanced economies tracked by the IMF, according to the AFR this morning.
The IMF says that the Government needs to find at least $50 billion in cuts to the net deficit “in today’s dollars” by 2020 if it is going to be able to keep Australia’s debt position at a “safer level”.
Interestingly though, when so many countries round the world have debt to GDP ratios at or near 100% or more, the IMF says this safer level is an almost comically low 4.7% of GDP.
The IMF data also echoed Treasury secretary Martin Parkinson’s speech last week which said the Government’s tax take would rise in the years ahead. The rise of 1.9% of GDP or $1300 a person on average would be 3 times the average of the 32 largest economies.
It also implied that the debate Parkinson sought to start last week needs to be had in Australia, noting that cuts to public service and welfare were the “most durable and growth-friendly” ways in which to address budget difficulties.
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