The Australian government is on track for more than 25 years of deficits. Teenagers starting high school today have never seen a budget surplus and probably won’t until they are well into adulthood.

The challenge is structural. Spending has grown because of rising community expectations, an ageing population, and the growing costs of providing labour-intensive services. But this increase in spending has not been matched by growth in the tax base. Indeed, the growing cost of income tax concessions and poor design of other taxes has eroded our revenue-raising capability.

On spending, better procurement processes for infrastructure and defence could save several billion dollars a year. The authors of this report put forward another $15 billion of savings measures, including undoing the WA GST deal, counting more of the family home in the aged pension asset test, and making health spending more efficient. Critically, the government will also need to make changes to ensure fast-growing programs such as the NDIS and aged care are sustainable.

On revenue, the menu includes winding back income tax concessions, redesigning the Stage 3 tax cuts, increasing the GST, and better taxation of fossil fuels. We would not expect the government to move on all these changes at once, but the menu includes choices worth about $50 billion a year once mature. Even if we did them all, we would still be below the OECD average in terms of tax collections as a share of our economy.

None of these policy options are easy. But if the government is serious about budget repair, it will need to embrace at least some of them.