|Sim City 2000|
Before I launch in to this post, I have a few confessions to make.
First - I HAVE studied economics at University. However. I studied Introduction to Economics 101 and Advanced Economics in the same semester...without ever having considered the wondeful cost/benefit dichotomy before in my life. It was a rough few weeks getting up to speed, let me tell you. What I did learn is that economics is not a perfect science, and that when people say, oh, but you don't understand economics, I can say, well no, not as much as you do, but you know what, there are about 15 brilliant economists out there that wouldn't agree with your conclusion either, and this is why: *insert wonderful summary of brilliant economist opinions here*
I also studied Global Governance, so sometimes I know a little bit about what I'm talking about. I hope this is one of those times.
Second - I loathe the current Federal Goverment, in case you hadn't picked up on that one yet.
Third - SimCity is available for free download. You will thank me later when you finish reading this post.
Alright, let's kick on.
The Federal Budget is about to be handed down amidst a plethora of broken promises and the rumoured gouging of vulnerable persons all over the country. You may be asking yourself, "What's new in politics, Nicole? Politicians do this ad nauseam, every year." You would be right, of course, but what I really want to focus on is something that bugs me about Liberal (big L) governments particularly. I know Tony is going to rip up some really great policies and play havoc with anything that could possible take our country forward, I know. What I'm really pissed about is the absolute bedrock fundamental that is never questioned - the importance of "Putting the Budget Back in to Surplus."
I'm about to make people mad, I can feel it through the keyboard as I type this. Too bad. My blog, not yours.
Household budgets work better in surplus, and everyone has a household budget, so it's relatable when Tony tells us we as a country need to get back to surplus. However, government budgets are not as easy as "I shouldn't buy that juicer at Aldi for $30 this week because I only have $40 to last til Tuesday." Government budgets are immensely complex, and not so relatable to everyone. (In case you were wondering, I have a $30 juicer from Aldi). However, what I do know is that being in surplus for the sake of being in surplus is not always a good thing. Let me explain.
The closest I have come to managing a national budget so far is playing SimCity 2000 - a lot. I'm not too bad at getting my little city growing, I'm pretty good at that actually. However, the first hurdle in the game is that the power plant blows up once it reaches 50 years of age and there is no way to make enough money to replace it before that happens. So you have to take out a loan, or your city runs out of power.
Stay with me here.
Now, the trick to getting to the next stage of the game (where the sims or citizens present you with a statue of yourself because you are such a good mayor) is to make sure your city is in a strong financial position to be able to repay the loan before you take it out. Once you have replaced the power plant, it helps to use a bit of the loan money to increase industry and build export too so that you can continue to make the repayments and grow the city.
Ok, now, Australia.
Australia is a very wealthy nation. We have a strong currency, we have favourable terms of trade with our neighbours, our Gross Domestic Product, or GDP, per capita is higher than most nations comparable to our way of life and, well, that thing called the Global Financial Crisis? Yeh, it didn't even tickle us compared to the rest of the world. I'm not saying we didn't feel it, I am a graduate of 2008 and getting a job was a bitch that year, but we never went in to recession.
Like my little cities in SimCity 2000, Australia has a strong economy. We are not running a budget surplus, but then, the only countries that are in surplus are mostly very small nations very well endowed with natural resources or those sneaky ones that act as tax free havens. Ahem, Kuwait, Hong Kong, Qatar, Angola... Countries we like to think we are comparable to are actually below us on that list; Japan, the US, the UK, New Zealand, Denmark, Canada.
Envious of our budgeting abilities they are.
What I am trying to say is that 'returning to surplus' as a reason in and of itself cannot justify cuts to services the public very much need, nor is it a good enough basis to make major policy decisions on. Why? Because economic growth is the point, closing the gap in the deficit by increasing GDP over time is how you do it, and taking on loans is ok so long as you are using that money on worthwhile projects that will have a tangible impact on growth.
Good example of a worthwhile thing: connecting people to super-fast broadband.
Bad example of a worthwhile thing: Robert Mugabe's $1 million dollar celebration of his 90th birthday paid for by his government.
We are doing very well despite running a deficit of -1.3% of our GDP, and the trend is not heading backwards. Inflation is low, unemployment relatively low too, and we can make the repayments without having to raise taxes any more than inflation would normally dictate.
So please, Tony, give us the real reasons you are making cuts. I couldn't give two figs if the budget doesn't return to surplus for another two or three years, hell take ten if you need!
If running a moderate deficit means we can afford nationally beneficial things like more NBN, better Medicare and a strong military, then as a responsible government, that is what you need to do, not pay back loans to spite our own growth.
You won't get any statues from your sims doing that.