Social policies are 'unaffordable'
Former Treasury secretary Ken Henry believes the national disability insurance scheme, Gonski school funding reforms and other social policies are unaffordable unless there is an increase in Federal Government revenue.
Dr Henry said the billions of dollars worth of tax cuts and welfare increases between 2004 and 2008 during the Howard and Rudd governments had put "considerable pressure" on the Budget.
"We cannot afford new social policies with the current revenue base," he told ABC Television's 7.30 last night.
He said the revenue take in 2000-01, when the GST was implemented, was 26 per cent of gross domestic product. It is now 23 per cent.
"The projected Budget deficit of the Commonwealth in 2013-14 is, guess what, 3 percentage points of GDP," he said.
"Which is another way of saying that if we had the same revenue collections today as we had in 2000-01, there would be no Budget deficit at the Commonwealth level, but we don't and instead what we have is new social programs.
"If you ask me, 'Do we have the capacity to finance new spending without new sources of revenue', the answer is no."
Dr Henry criticised the Abbott Government for forcing Martin Parkinson out as Treasury Secretary, saying that in 114 years and 16 secretaries, no government had thought it appropriate to remove the head of Treasury and put in somebody "of a more comfortable political character".
Dr Parkinson ends his time as secretary mid-year.
