01 Apr Where Our Hard Earned Dollars Are Spent
Federal Budget time next week so we get the update on how the Nations finances are looking and any new tax measures that may or may not be introduced (expect some “election sweeteners” this year). It is timely in having recently lodged my tax return the Government now tells everyone how and where they are spending our hard earned dollars.
Now nobody likes paying taxes, but it is has been a part of the world since ancient times to keep countries running. In ancient times the rulers of the day got people to pay their taxes by calling the tax a contribution to their Temple, or to their Gods. That’s why you see where Temples were often built right by the gates of a town: to collect taxes from traders as they arrived or as they left the town. Sometimes when people of ancient civilizations seemed to have been fighting about religion they were really fighting about whether to pay taxes, or increased taxes (can anybody say the current French “Yellow Vest” movement) and who should collect them. Many towns built city walls for the same reason – so they could control who was coming in or going out of the town and to collect taxes from them.
I’m sure you all remember Kerry Packer’s famous appearance before a Senate Committee in 1991 and his statement on taxes. If not, here is his quote to remind you and a You Tube clip to re-visit it
“I don’t know anybody that doesn’t minimise their tax. I’m not evading tax in any way shape or form. Of course I’m minimising my tax. If anybody in this country doesn’t minimise their tax they want their head read. As a government I can tell you you’re not spending it that well that we should be paying extra”.
As you will be able to see below as reported by the ATO the vast bulk of Federal Government expenditure goes on welfare and health (almost 60% of expenditures). When you add in Defence & Education and you are heading towards 75% of total expenditure. Keep your eyes peeled in the budget for expected increases in such spending as historically the rate of growth in this type of spending has been way in advance of inflation.
| Federal Government Expenditure | Percentage Of Taxes Spent |
| Age Pension | 15.8% |
| Disability Pension | 9.1% |
| Family Benefits | 8.9% |
| Unemployed | 2.8% |
| Other | 2.0% |
| Total Welfare | 38.6% |
| Health | 19.2% |
| Defence | 9.3% |
| Education | 8.4% |
| General Public Services | 4.8% |
| Interest On Government debt | 4.2% |
| Transport & Communication | 2.3% |
| Fuel & Energy | 1.9% |
| Industry Assistance | 1.5% |
| Foreign Affairs & Economic Aid | 1.4% |
| Housing & Community | 1.3% |
| Public Order & Safety | 1.3% |
| Immigration | 1.0% |
| Recreation & Culture | 0.9% |
| State & Local Government Transfers (excluding GST) | 4.0% |
| Total | 100% |
Not only that but the Government now tell us how much money they have borrowed and the increase from 1 year to the next. In 2016/17 the Federal Government had gross debt of $501 billion. This increased to be $533 billion in 2017/18 and they paid interest of $16.3 billion. This figure is surely to continue to rise.
Please note that these are my own general personal thoughts (Richie Parsons) and do not necessarily represent those of my licencee LWP Financial Pty Ltd T/As Blueprint Advisor Group, nor do they represent any form of personal financial advice.