Something will happen this week that will alert us to the reality of this government’s failures.
Despite all their rhetoric and their pathetic attempts to demonstrate their economic prowess, despite all attempts to gloss over their outright lies, their pretence at understanding economics, this week these champions of capital, of fiscal irresponsibility, will have the honour of taking our gross debt position beyond half a trillion dollars ($500,000,000,000).
Even in their eyes, this is a disaster for their credibility.
Check it out for yourself at the Australian Office of Financial Management. Surely we should celebrate this achievement with a public holiday. Or perhaps more appropriately with a fireworks display. More likely, those who believed their false claims should hang their heads in shame.
It is an unprecedented amount and double that which they inherited from Labor in 2013. Incredibly, they have done this in less than four years, compared with Labor’s six years of solid economic management that included a recession-saving stimulus after the GFC.
One Nation senator, Pauline Hanson was moved to remark, “At this rate we will never be able to pay it back,” she said. “We need to rein in our spending.” That is what we call an observation from ignorance. But let us not be too hard on her. There are 150 lower house members and 75 other senators who think the same way.
Some MP’s are calling for the reinstatement of the debt ceiling. You may remember former treasurer, Joe Hockey wanted to lift the debt ceiling to $500 billion back in 2013. In the end, the whole idea of a ceiling was abandoned following a deal the government did with the Greens.
A quick word of advice for Senator Hanson. No, we won’t be paying it back, not ever. The fact is, a currency-issuing nation can never run out of money, can never owe anything in its own currency, can always afford to buy whatever is for sale in its own currency, and indeed, has a responsibility to ensure all men and women seeking work, are able to find it.
If work cannot be found in private industry they should be employed by the state. As matters stand today, the government is failing in that responsibility because over 700,000 Australians are currently seeking work and cannot find it. That means we are not spending too much, we are spending too little.
The government’s reluctance to spend is consistent with their pursuit of what is, in their eyes, the Holy Grail; a balanced budget, one where spending equals taxation receipts. It is a grossly flawed objective.
To avoid the embarrassment of having to fess up to that failure, to provide work for its citizens, our treasurer Scott Morrison has found a very convenient loophole for his, and the nation’s, future. He calls it “good debt.”
His plan is to somehow separate value-adding “good” debt (infrastructure spending and the like), from the ever burdening “bad” debt (pensions, unemployment and sickness benefits etc), when preparing his next budget, in the hope that it will miraculously produce a balanced budget.
It’s actually a half good, half bad idea. The good half is that he recognises the value of infrastructure spending. The bad half is that he can’t see that welfare spending also puts money into the hands of people who spend it. Money spent on infrastructure is no different from money spent on welfare. It’s still spent!
What he can’t see, is that rather than spend on unemployment welfare, he could harness the idle resources of the unemployed in ways superior to welfare spending, thus raising the living standards of all Australians and in turn, benefit the nation as a whole.
He could give them a job. He could, by his own definition, so easily convert his “bad” debt into “good” debt, by eliminating unemployment benefits in favour of employing the unemployed and the underemployed in public works.
He could then confidently argue that because it is all good debt, there is no need to issue bonds. The money can be classified as “Overt Monetary Financing”, another way of saying, money created out of thin air. In doing so, he would have the so-called “balanced budget”, he so desperately wants.
A balanced budget is all just numbers in a computer. The trick is to have the numbers in the correct place. At the moment they are not, but they could be, so very easily.