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One particularly interesting issue in the MYEFO documents is the ratio of tax to GDP. As this ratio rises, the government makes a large footprint in the economy by taking money from the private sector, through taxes, as part of its budget management.
The following table presents the 10 highest taxing governments since 1970-71 and includes the outlook in the forward estimates to 2019-20. It is an interesting collection.
Smoking in Australia is in free-fall. Just 13 per cent of adults smoke daily, which is down from 28 per cent in 1989-90 and over 40 per cent in the 1960s.
There are many reasons why this is a good thing. The population will be healthier for a start, which means they will be more productive and less likely to take sick leave. It also means that the government’s health expenditure costs will be lower with fewer people presenting to the doctor and hospital for the litany of smoking related illnesses. It also means that those who do not smoke can either save or spend their cigarette money elsewhere in the economy.
There are many reasons for this quite massive change in smoking rates. I will not attempt to quantify the impact of each factor, but there is no doubt that societal awareness of the health risks from smoking is dominant.
In a triumph for the role of government in successfully managing change and a blow to those who often castigate the ‘nanny state’, government policies that have banned cigarette advertising, delivered anti-smoking campaigns, the massive hike in excise taxes, banning displays of tobacco in retail outlets, graphic health images on packets and plain packaging, have no doubt all played a part.