Tax cuts now trump deficit later

The government is making a mess of balancing budgets to come, if a new analysis for Universities Australia is to be believed.  UA warns that the government policy of funding undergraduate places for the next three years at 2017 levels will have a huge impact on labour productivity, measured as the difference between graduate wages and those earned by people with VET certificates.

At worse, UA’s report warns, GDP will be $12.3bn lower over 20 years with $3.9bn less tax collected.  “These findings demonstrate that, even in the most conservative scenario, the short term fiscal savings to government are offset by the long run cost of reduced tax receipts — and are substantially less than the long run cost to the economy. “

“The government will avoid an economic ‘own goal’ by reversing the university funding freeze,” UA CEO Belinda Robinson says.

With PAYE tax cuts in the budget tomorrow night all but announced UA might struggle to get a hearing.


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