Tax receipts as a share of GDP rose by over four percentage points between

Tax receipts as a share of gdp rose by over four

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Tax receipts as a share of GDP rose by over four percentage points between 1928–29 and 1932–33 (Chart 12). In contrast, during the current downturn, the tax take is estimated to fall by about 3½ per cent of GDP due to a combination of automatic stabilisers and tax cuts. Chart 12: Aggregate Government tax receipts (a) (per cent of GDP) 24 25 26 27 28 29 30 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 11 12 13 14 15 16 17 1928-29 1929-30 1930-31 1931-32 1932-33 1933-34 Great Depression (RHS and top) Now (LHS and bottom) (a) Aggregate Government includes Australian Government and state–territory governments. Australian Government data for the current period are from the 2009–10 MYEFO. Data after 2008–09 are estimates. State–territory data for 2007–08 are from ABS Government Finance Statistics. 2008–09 to 2012–13 are from States’ 2009–10 Budgets with the exception of the ACT which are from its 2009-10 Budget update. 2008–09 data for WA, Vic and NT are from final budget outcomes 2008–09. Source: Barnard (1987), Table GF 1–7 and Treasury. As I have already noted, Australia lost access to the London capital market in 1929 because of high levels of government debt which severely constrained fiscal policy responses to the crisis. Total government gross debt was already well over 100 per cent of GDP before the onset of the Great Depression (Chart 13). With fixed interest loans denominated in pounds sterling these levels increased to a peak of 205 per cent of GDP in 1931–32.
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What have we learnt? The Great Depression in Australia from the perspective of today 46 During the current downturn, gross debt for all levels of government has also risen, and is estimated to peak at around 35 per cent of GDP over the next few years. 18 Chart 13: Aggregate Government gross debt (a) (per cent of GDP) 0 50 100 150 200 250 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 0 50 100 150 200 250 Great Depression (top) Now (bottom) 1928-29 1929-30 1930-31 1931-32 1932-33 1933-34 (a) Aggregate Government includes Australian Government and state-territory governments. Australian Government data for the current period are from the 2009 MYEFO. Data after 2008-09 are estimates. Commonwealth Government securities on issue is used for the current period. State-territory data are borrowings of non-financial public sector entities. 2007–08 data are from ABS Government Finance Statistics. 2008-09 to 2012-13 are from States’ 2009-10 Budgets with the exception of the ACT which are from its 2009–10 Budget update. 2008-09 data for WA, Vic and NT are from final budget outcomes 2008-09. Source: Barnard 1987 (Table GF 1–7) and Treasury. What have we learnt? At the time of the Great Depression, Australia’s macroeconomic policy frameworks were tragically ill equipped to cope with anything other than small, inconsequential macroeconomic or financial market shocks. Faced with a shock the size of the Great Depression, they were simply overwhelmed. The lessons learnt from that disastrous experience have informed the macroeconomic policy frameworks of today.
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