Former Australian prime minister John Howard has argued against increasing taxes to pay for the federal government’s COVID-19 pandemic response bill.
In an interview with the The Weekend Australian newspaper, Howard also says the impact of COVID-19 on the global economy is a reminder of the importance of Australia’s mining and energy resources, including coal.
The impact of the Morrison government’s response to the crisis is already being felt in its latest monthly financial statement for March.
It showed a budget deficit of $22.4 billion for 2019/20 so far, and nearly $10 billion greater after nine months of the financial year than had been forecast in in the mid-year budget review in December.
On April 25, Howard told The Weekend Australia he is not in favour of increasing taxation.
“If everybody starts arguing that the way out of this inevitable recession is to increase tax then they don’t understand economics and they don’t understand the mood and temper of the Australian people,” he said.
The government has repeatedly said tax increases are off the table as it considers wide-ranging reforms in the October budget, which will shape the national recovery.
The budget has been delayed from its traditional May release because of the pandemic.
On mining and energy, Howard said the impact of the COVID-19 on the global economy was a “brutal reminder” of just how important Australia’s energy resources and fundamental to the economic recovery.
“How anyone could possibly argue that somehow we have to reduce our reliance on our great export industries as a deliberate government policy has to be out of their mind,” he said.
“It is one of the great assets providence has given us.”
He said the energy and resources sectors and a strong economy put Australia in a better position than most countries.
The government has spent some $230 billion in various measures to help shield the economy from impact of the coronavirus, including the $130 billion JobKeeper scheme.
Commonwealth Securities chief economist Craig James said the virus has robbed the nation of budget surplus and the deficit is set to lift sharply from here.
“But it’s important to remember that the support payments are temporary. If the economy bounces back quickly then the deficit will start narrowing again over 2021 and beyond,” he said in a note to clients.
By Colin Brinsden