GOVERNMENT can achieve its five-year fiscal plans if it contains duplicate aspects of Government and broaden business base for businesses to grow and invest, says Institute of National Affairs (INA) executive director Paul Barker.
“In the Government’s five-year fiscal plan, also agreed with the IMF, they’ve been aimed to achieve a balanced budget in 2027, but in the meantime continue to half deficits, but get smaller each year.
“Whether plans are achieved depends upon a combination of the soundness of the plan, the discipline to implement it, but also various variables which introduce risk and uncertainty such as occurred in 2020 with the unexpected Covid pandemic, which dispersed from Wuhan in China around the whole world in a matter of weeks, disrupting trade and economies, revenue and expenditure and resulting in severe deficits pretty well everywhere.
“The economy has been growing around 3 per cent this year, down from the forecast growth rate. This also occurred in 2023. When growth failed to achieved its target.
“Growth doesn’t translate directly to extra revenue, but over the course of time it is a key driver, but it clearly also depends on the nature of taxes and their application, whether various tax concessions are granted and other giveaways and the transparency of the process.
“One would expect the government to be able to achieve its 2027 balanced budget, but only if it constrains the growth of government, particularly unproductive and duplicative aspects of government, if it manages to achieve a broad base of businesses to grow or invest, and preferably some major projects or nucleus enterprises to actually kick off, especially if they have broad interactive connections, generating a multiplier effect.
“Government services, such as education and health, are long term investments in human resources and the economy.
“Targeted infrastructure investment which improves reliable access, or power generation, but also law and order and corruption constraints, encouraging competition and reducing bureaucratic delays and duplication, all encourage investment and growth, and hence prospectively greater tax revenue in due course.
“Multiplying Ministries, extensive overseas travel, waste, much ill-planned and accountable constituency grants and cumbersome SOEs, all restrain growth, performance and down the track, revenue, and jeopardising the fiscal targets.”
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