Australian Lefty on Politics, Governance, Science and Info Management

It IS a balanced budget

Posted by Dave Bath on 2009-05-14

The Rudd/Swan budget this weeks is certainly more balanced than anything Howard/Costello ever put forward.

It is balanced in the sense of NOT massively redistributing the nation’s wealth to the least needy, of NOT destroying our future by letting infrastructure stagnate.

Is it perfect?  Nope.  Far from it.  But the circumstances don’t allow it.

The worst sin?  Probably the massive spending allocated to war toys when it is cheaper to strengthen international bodies, the future of international conflict in the next few years will involve fewer traditional warfighters, more automata (the Pentagon wants to have robots and drones making up a third of their "forces" within the next few years), and cyberwarfare.  Massive spending according the the rules of the last major war is dumb, but too common.

The second worst sin in the budget is maintaining any sort of private medical insurance funding at all.  The poorest can’t afford it, the richest don’t need the largesse, and the middle-class would get better health outcomes if the middlepersons in the medical "insurance" industry weren’t creaming off profits and inflating prices.

Imagine what we could do if we merely trimmed $50 billion from the defence spend over the next few years!  Imagine what we could do with the $4 billion a year the gift to the so-called "health insurers" costs us!

The key criticism I have of the budget (taken as a whole) is not in the measures it takes, but the projections for revenue and economic activity.  For instance, my gut tells me that peak unemployment will hit 10% rather than 8%, even with these metrics being poorly designed and massively underestimating national underemployment.

The Pollyanna-ish figures given out by Swan can be understood if Treasury, notoriously wrong in forward projections, are concerned about the negative impact of a drought of confidence on revenue and wider economic activity.

However, there is confidence and confidence.  Unjustified confidence in prognostications of economists aligned with the finance industry led us into the present mess.  The only confidence consumers need is security of income – and increasing the size of the public service, creating secure employment, is perhaps the best way of doing it.  Given that years of infrastructure spending are required, wouldn’t it be better to build it with government employees rather than sending profits to consortia?  That’d also give you a very good money-multiplier effect.

Austerity and security are not incompatible, while baseless confidence and profligacy are too often hand-in-hand.

Meanwhile, over in the Opposition benches, we have inane bleatings rather than breastbeatings and tearing-out-of-hair in shame at the mess the Howard/Costello economic vandalism created – a mess foreseable by Blind Freddy, as long as Freddy discounted the propaganda from financial touts and self-interested corporates and concentrated instead on impartial economists such as those from academia and journals like "The Economist".

The Howard years were basically a time of the economy falling off a skyscraper, enjoying the thrill, and yelling "I’ve fallen 20 floors and feeling fine".

There are still many bubbles to burst.  The price of housing is one (and this should have governments crying "we’ve made housing more affordable"), and the value we place of economic activity rather than equitable welfare of all citizens is another.

Most Australians think we need a big GDP.  They don’t realize that even with a near-third world per-capita GDP, Cuba boasts near-first world scores on health and education metrics, while meeting environmental imperitives by not using more Global Hectares than the hectares Cuba has.  (Australia uses about 3-times the average per-capita GHa, many more than the per-capita hectares based merely on our own land.)

If the Australian electors were better informed, then the budget could have been even more balanced.  Will the politicians take steps to inform the public, make them big-picture economically literate so that better budget measures can be taken next year?  Probably not.

I will make one prediction – there will be lots of unofficial mini-budgets – if only as the Treasury projections are proven inadequate, as they have proven inaccurate for many years.


6 Responses to “It IS a balanced budget”

  1. memeweaver said

    Here, here!

    The only bit I would seek to qualify is the part about funding more public service jobs. Having worked in the public service, the thought of more unnecessary bureaucracy gives me the heebie jeebies.

    However, if this funding was extended to include community organisations (which are almost entirely government funded anyway) and community workers were put on equal pay with government workers, then this would be alright by me. Community workers usually work just as hard, if not harder, than relatively handsomely paid public servants. And yet, in NSW, they get paid the SACS award, which is about half the salary of a public servant, once you get into the higher qualified positions. For instance, highly-qualified, highly-experienced community legal centre solicitors get paid something like $45000 p.a. at the highest level of SACS. Whereas government legal officers (e.g. legal aid solicitors) get paid much, much more (and let’s not even think about what you might earn in private practice). For this reason, community legal work doesn’t seem like a very attractive prospect for solicitors with a great deal of experience and sought-after credentials. When good community lawyers move on, as they almost inevitably do, the community loses out (esp, the most disadvantaged, once again). And the government seems to be relying more and more on community organisations to fill the gaps in service provision that they find they can’t (or won’t).

    I prefer the thought of robots mostly fighting our wars to the more conventional tactics. Do you think they’ll bring in conscription for machines though, when times are tough? I suddenly feel very protective of my microwave…

  2. Dave Bath said


    I understand your concerns about unnecessary (mis)management, but I do believe that returning utilities and infrastructure to government control is both in the national interest and provides job security to the workers, as well as encouraging "corporate memory" in the provision of services.

    There is good red tape and bad red tape.  A study reported in The Economist a few years back showed that where public servants were paid a livable wage, red tape helped the economy because of improved governance and better knowledge by senior managers of what was actually going on.

    "Bad red tape" causes problems when the public servants are not paid a livable wage (think of many undeveloped countries), and each regulation presents an opportunity for unofficial and undeclared "expedition fees".

    And besides, those on the highest salaries would get paid closer to what they are worth when they are public servants – rather than the unreasonably high rates and the bonuses they award each other.

    It is also worth noting that I am not talking about expanding the public service workforce by continuing the practice of having senior staff on contract – where you are threatened unless you are saying "yes" to everything your boss posits and tries to get away with.

  3. Most Australians think we need a big GDP. They don’t realize that even with a near-third world per-capita GDP, Cuba boasts near-first world scores on health and education metrics, while meeting environmental imperitives by not using more Global Hectares than the hectares Cuba has.

    That statement is a bit lame, Dave. You’re suggesting the website I’ve linked to is lying and Cuba really is a workers paradise……..surely you’re not that deluded.

    • This article is a bit more ‘peer reviewed’:

    • Dave Bath said

      Mick Sutcliffe@3:
      I’ll justify my figures by pointing to my sources, the UNDP and the CIA World Factbook – the latter hardly likely to flatter Cuba, and the UNDP hardly likely to provide dodgy data.

      Did I say it was a “worker’s paradise”? No. Not here. That’s a different argument. Did I say it was the best of all possible political regimes? Nope. (Mind you, in 50 years, no-one ever accused Fidel of lining his own pockets at the expense of his people, unlike guilty regimes of right and left like Ferdinand Marcos or Kim Jong Il – but again, that’s a discussion for another time).

      I /did/ say that health and education metrics, especially on a per-GDP-per-capita basis, demonstrate Cuba has performed much better at turning GDP into health/education/sustainability metrics. Perhaps the most telling metrics comparing Cuba to the USA are for infant mortality and vaccination rates, even without adjusting for the difference in per-cap GDP.

  4. Most Australians think we need a big GDP. They don’t realize that even with a near-third world per-capita GDP, Cuba boasts near-first world scores on health and education metrics, while meeting environmental imperitives by not using more Global Hectares than the hectares Cuba has.

    Dave, you can’t be serious. While it’s maybe not a complete basket case in terms of life expectancy, it’s close to it on most other measures: Anything to keep the socialist dream alive, I suppose.

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