Malcolm Turnbull warns Australians to watch out for “Labor’s big spend”. Yet tax in Australia is approximately 25% of GDP compared with approximately 50% in the Nordic countries.
The Nordics understand that you must invest in resources to reap the rewards. Neglect of services and infrastructure saves money short term – but harms the economy long term. Transport and communications infrastructure add to productivity, and there is the prospect of new industries arising from Labor’s world-class National Broadband Network (NBN).
‘Human Capital’ means more high-wage, high-skill jobs – but requires an investment in Education. An interventionist Industry Policy can get unemployment sustainably down well-below 5% – boosting tax revenue and growth – but also requires resources. Social consumption (via tax) can also provide better value and free up wealth for private consumption elsewhere. Nordic universal health care costs around 9% of their GDP, whereas the US system of (mainly-private) health insurance costs 18% of their GDP for only 40% coverage.
Finally, we are a society, not merely an economy ‘in abstract’. Health, Education, Aged Care, ABC and SBS, Roads, Rail, NBN – are ‘social goods’ which improve our security and quality of life. These things are worth investing in if they make us happier and healthier. If anything Labor’s policies are exceedingly modest; but still far-preferable to Conservative austerity.
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