Illustration: Michael Mucci Credit:Michael Mucci Remember that old fashioned idea that budgets should balance? Remember the idea that tax cuts should be delivered only when there is sufficient revenue? Remember the idea that great big new taxes – like the GST – may be helpful to reform the tax base of the economy? Ah, socialists. Tea Party rhetoric First under Abbott, now under Turnbull, Australia's traditional conservative party appears to have turned its back on the Howard and Costello era consensus that good economic management means balancing the budget.

Instead, their rhetoric increasingly echoes that of the American Tea Party, which says taxes must never rise, and, even sillier, that tax cuts will actually fix the budget. They won't. John Howard: his Pacific Solution was "central" to the Coalition's 2001 election victory. Instead, we have the spectacle of Turnbull trying to broker a deal with the states to make up for severe budget cuts by delegating them tax raising powers they were forbidden from using in the short term. Turnbull & Co refuse to countenance the one thing that would actually fix the budget: tax increases. The Treasurer, Scott Morrison, now concedes his first budget will contain "revenue measures".

It's the revenue, stupid. More than just rates And I don't mean increasing tax rates. You can increase the amount of tax revenue collected through existing tax rates by simply broadening the base that they apply to. To collect more through personal income tax, you can remove too generous concessions on contributions to super or reduce the ability to claim work-related expenses to offset income. Spending, is, in fact, the entire project of government For more company income tax, you can abolish industry schemes which provide offsets and credits, like for the use of petrol.

For more capital gains tax, you can reduce the generosity of the concession which says tax only applies to half the increase in value of a certain asset, like property. If Turnbull & Co don't attempt at least some of this type of base broadening in next month's budget, we will know for sure that they are not serious about fixing the budget. Liberal Party recklessness It is astounding that the Liberal Party should have spent so much time recently talking about wanting to cut personal income taxes, when the budget remains in structural deficit. It's the sign of an increasingly intellectually bankrupt and fiscally reckless organisation.

Why go to the bother of running for parliament, being elected and serving, when your only vision is to reduce your organisation's revenue? Why not join the IPA instead? Sure, all governments should strive to reduce obvious waste and duplication. Governments who are honest about the job should stop subsidising people to do things that they would do otherwise, like get private health insurance or a private education for their child. Government role The single minded obsession with reducing government spending signals a worrying lack of understanding of the central purpose of government in the first place: to make strategic, social investments that increase the wellbeing of society; to spend money on education to increase society's future earnings capacity; to spend money on health to reduce suffering and extend life; to spend money on social support programs to help people facing temporary difficulty.

Government spending is not the dirty word that Treasurer Scott Morrison, in particular, seems to think it is. Spending, is, in fact, the entire project of government. Sure, good governments scrutinise spending to make sure it is achieving its stated goals. But good government doesn't just go around slashing programs to achieve an arbitrary goal for government spending as a proportion of GDP. The "fiscal envelope" – Turnbull's phrase de jour – is what you make it. The federal budget's forecasts are built around an assumption that taxes will not rise above a cap of 23.9 per cent of GDP. Why? Because that seems to be about the historic average of the past decade. This revenue cap is intended to recognise the reality that taxes can not rise much above this level, or ordinary taxpayers will become outraged, they'll riot in the streets. Sound assumption?

Without this tax cap assumption, the budget is actually in a much better position than it seems. Of course, economists agree it would be better if we didn't put so much of the burden of taxation on personal income, and instead levied them on more efficient bases, like land or consumption. But economists also believe that balancing the budget matters – whether through tax increases or spending cuts. The Australian public also has a history of believing the same thing. If Abbott's 2014 budget showed anything, it is that Australians are not prepared to stomach the sort of deep spending cuts that are required to bring the budget back into balance alone. Australians, as it turns out, believe in the project of government: to deliver them public services in health, education and social support that make our lives more comfortable.

We might even be prepared to pay for them, if a politician were brave enough to ask. The truth is we're a rich country, and the richer we get, the more services we will demand of government. Turnbull must choose: fix the budget by broadening the base or continue with this short sighted obsession with cutting taxes. What do you think is worse? A higher tax take or a budget that never balances? Most economists would increasingly nominate the latter.