It appears that Malcolm Turnbull and South Australian Premier Jay Weatherill ideologically have a lot more in common than most would think… and every bit as much in common as some would.

Here is Weatherill following today’s COAG meeting:

South Australian Premier Jay Weatherill, who proposed the income tax sharing idea, said Australia had a revenue problem that would not be fixed by one change.

“We don’t raise enough taxation as a nation to meet the imperatives that we have,” he said.

And here is Turnbull:

“We have to be clear-eyed about our choices – how do we get improvements to our infrastructure and central public services when there are more demands on government but less revenue available to pay for it,” Mr Turnbull said.

Eh?

The raw numbers

Firstly, here are the raw numbers for the Federal Government’s revenue and spending over the last 10 years:

(NB: this graph is exclusive to The Marcus Review and is based on the Federal Government’s 2015 budget papers).

Most businesses would kill for this kind of revenue growth. Trust me, I know.

By the way, the red line is your money literally being catapulted into oblivion.

The Revenue to GDP argument

Some like to argue that government revenue since the Howard years is ‘only’ 22%-23% of GDP, whereas under Howard, the figure was routinely 25%. They then use this as justification for further budget atrocities.

(NB: for the 2014-15 and 2015-16 financial years, the revenue to GDP numbers are slated to be 23.5% and 24.0% respectively).

While the GDP numbers are true for the Rudd-Gillard-Rudd years, a quick look further back in time shows that 22%-23% figures are far from unheard of – and 24% is pretty good. In fact, since 1970, there were seven times where we had revenue less than 24% of GDP and still managed to turn a surplus for the year.

Having government revenue at 25% of GDP is not normal for Australia and the government’s spending decisions over the years certainly do not justify making it the new normal.

Suffice to say, revenue isn’t the issue: it’s always been about the spending – and it’s created a debt of catastrophic proportions.

I repeat, we have a serious problem

This may seem condescending, but some short term deficit/debt supporting solid investment – for which there is a realistic plan of paying back – is ok. A futruckload of unmanageable debt is not. Revolutionary stuff, I know.

The problem is that we have a $400 billion federal debt on our hands for which there is no plan in place to pay back.

Some disingenuous fools will try to say that our federal debt isn’t that bad. Apparently, you’re not very smart if you look at the raw number (about $400 billion and rising to around $500 billion) and say to yourself ‘wow, that’s a lot of money by any standard’.

Somehow, inflation explains that very big number and we shouldn’t strain our tiny brains thinking too much about it. It’s not like we’re Greece or anything. And c’mon, the debt is ‘only’ a fraction of our GDP after all. Just because the annual growth in our federal debt reads like an IPCC global warming prediction, it’s really nothing to worry about:

(PS: I’ve used a debt to GDP chart here so that we can all feel more intelligent like our more ‘sophisticated’ friends at the Guardian).

Of course, of all the people who spout this guff, not one of them will actually tell you:

• where they think the debt will peak;

• what a maximum acceptable debt figure is and why;

• when or if they think we should ever pay the debt back; or

• what plan (if any) they would put in place to start paying the debt back.

This is all before even getting to the point of asking what we actually received in return for our $400 billion loan (yes, I’m spruiking my three part special again).

Apparently, it’s all good as long as long as you can point to some other countries worse off than you. Ambitious thinking isn’t it?

Perhaps the plan is to wait until we become a third world country so that we can ask Bono to lobby our creditors and have it all written off?