On the ABC's 7.30 this week, former Treasurer Peter Costello said major tax reform in Australia had become almost impossibly hard.

"If you're going to have a discussion about tax reform, it's preferable to start when you've got a bit of padding amongst public opinion because this is hard," he said.

"This is harder than balancing a budget, and I've done both, and major tax reform is off the Richter scale."

He was talking about the GST, but his comments can be applied more broadly.

Advertisement

The next morning, Treasurer Joe Hockey appeared on Seven's Sunrise and ruled out increasing the GST before the next election.

One of the more depressing things about covering this government's first budget has been listening to some of the best economists in the country explain why the government's budget repair job could be so much easier if taxes were raised – and if big handouts were taken away from – those who could most afford it.

But instead, we've watched the public react angrily to the budget because the government introduced measures that hit the poorest and the youngest disproportionately hard.

The government lost a large amount of political capital for its efforts, and that in turn has made its job much harder in the senate, where many of its savings measures are still being debated.

Why did it choose this path? Economists have pointed out better ways to fix the budget.

The government obviously felt, in part, that it was easier to begin its budget repair job by going after people with the least amount of political power.

Rather than making significant structural reforms to the economy by reining in handouts and subsidies for the wealthiest, it went for the easier option by targeting the poorest.

It must have felt it was better to lose political capital this way than to lose it fighting people with real power.

According to the Grattan Institute those aged 25-44  could be the first in 70 years to see their standard of living fall below their parents'.

Thanks to efforts by the last few Liberal and Labor governments to redistribute massive amounts of wealth from younger to older generations, younger Australians could be lumbered with debts so large that their standard of living will drop.

And they've lacked the power to do much about it.

John Daley from the Grattan Institute is trying to reframe the argument about the government's budget repair job in ethical terms, asking: is it fair that younger Australians will have to pay for the current largesse of the oldest and wealthiest in society?

He has prescribed tough budget action that will target the better-off in society.

He suggests seriously tightening eligibility for the age pension; reducing superannuation tax concessions; increasing tax on assets, including property and capital gains; but also reducing income and corporate tax to compensate.

That would help to repair the federal budget in a different way – low-income households would not feel as much pain.

But he acknowledges the diabolical politics of such measures, given almost half of eligible voters in the last federal election were 50 or older.

That's the point we should be emphasising.

The government has comes up with a budget solution that was politically easier – but arguably economically less efficient – because it lacks the courage to go after older and richer Australians.