From today, I declare that Australia is under new management and that Australia is once again open for new business,” Tony Abbott

“All models are wrong; some models are useful.” George E. P. Box

“The effective manager is the resilient future-taker in each of us, while the effective leader in each of us is the purposeful future-maker. Social justice should demand that we do not just learn leadership and management in business schools and professional development programs. We must make this curriculum and these capability-building experiences universal. What is really behind this extraordinary failure to recognize that these capabilities should be universally accessible is the belief that management and leadership are elite programs for a minority rather than a birthright for the majority. We see management and leadership in particular as something we use to shape the future of others and that it is not a skill set we need to shape our own futures.” Peter Ellyard

Many times in the past few years, we’ve had the Government compared to a household and the Opposition has chastised them for “putting things on the credit card”, but now we find that the Liberals are in power we have the Government being likened to a business. Of course, the Government is neither. And I’m not just being pedantic in complaining about the change in the simile.

It’s easy to be caught up in the analogy. When one thinks of a household, a family that can’t pay off its credit card obligations at the end of the month is charged an excessive rate of interest. They’re living beyond their means and need to economise. They may even need to consider obtaining a loan at a much lower rate of interest (like the rate of interest the Australian Government would be paying) so that they can get their finances back under control. And we’ve been encouraged to think about the Australian Government like this. A business, on the other hand, is there to make a profit – that’s their main aim. So, if the Government is like a business. it should be making a profit. And, of course, many businesses take on debt in order to maximise their profits, so some debt shouldn’t be a problem.

A Government is neither a business nor a household. It’s a government. It has a number of functions. One is to regulate, to make laws that ensure that society remains safe and civilised. Another is to provide the sort of services that would be difficult for private citizens to provide for themselves – defence, roads, health and so on. Often there has been some discussion about what a government should be providing with organizations like the IPA seeming to argue that any regulation that is bad and that the free market would sort everything out.

My problem with comparing the Government to a business is two-fold. First, because the business analogy is applied inconsistently. Because businesses generally exist to make a profit, there’s no problem if they generate more revenue than they spend. They can either declare a dividend or reinvest the money. And if a business has assets and a good cash flow, nobody thinks it’s a bad idea if it goes into debt in order to generate more revenue in the future. If governments get more revenue than they spend, they run a surplus. A surplus means that they’re taking more from taxpayers than they give back. Who benefits? The prevailing argument is that we do because our government has lots of money. But this seems to go against the Liberals’ belief that small government is good. And the Liberals had a problem when the Rudd Government declared a dividend of $900. Similarly, the concept that the economy would benefit in the long run if we borrowed and invested in the stimulus package, keeping people in jobs, thus preserving the Government’s revenue stream and stopping the country falling into recession. As a ‘business” strategy, we didn’t fall into recession. And the “owners” received a dividend from the years where we ran surpluses. Hardly something to criticise!

My second objection has to do with the nature of business. Some businesses will succeed, and others will fail, and, as a society, we really don’t have to worry about this. It’s a natural selection process. Of course, the extent to which we support the failures is highly political. Should we subsidise? Encourage entrepreneurs with financial incentives? But the idea of businesses succeeding and failing is part of the capitalist system. We know that most restaurants won’t succeed, most small businesses will fail and that even big companies have a limited lifespan. Why would we want our government to emulate a business? Surely we want our government to be a force for stability.

To measure whether a business is a success is very simple! If it still exists, it’s a success. I suggest that we have entirely different measures when judging whether a government has succeeded. (Although, I’m sure that there were times when Julia Gillard wanted to use that one!) No Government could get away with arguing although half the population were homeless, the others are earning so much that we have the biggest surplus in Australia’s history.

Perhaps, it’s time that some objective criteria for measuring a governments success was invented. Certainly, opinion polls could be one measure. When it’s the only measure, we might as well turn off politics and just start watching “Australian Idol”.