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Tag Archives: CurrencySovereignty

Why a Currency Sovereignty Government Should Fund Services

By Denis Hay

Description

An Australian currency sovereignty government can improve social services instead of focusing on a budget surplus. Learn why in this comprehensive guide.

Introduction

Australia, with sovereignty over its currency, has the unique ability to manage its economy differently from countries that do not control their money supply. Yet, the Australian government continues to prioritize a budget surplus, even as vital social services like healthcare, education, and housing are underfunded.

This article explores why a government with monetary sovereignty focuses on a surplus and how shifting priorities could better serve Australians’ well-being.

Despite Australia’s control over its currency, a focus on budget surpluses has left essential social services neglected, impacting the quality of life for many citizens.

This fixation on fiscal conservatism exacerbates inequality and undermines the potential for a robust, inclusive society.

By utilizing Australia’s monetary sovereignty, the government can strategically invest in social services without the need to achieve a surplus, fostering a fairer and more prosperous nation.

1. Understanding Currency Sovereignty

What is Currency Sovereignty?

Currency sovereignty refers to a government’s control over its own currency, giving it the ability to issue its money and manage monetary policies without external constraints. Australia, as the issuer of the Australian Dollar (AUD), has full control over its currency.

This allows the government to manage inflation, employment, and public services without the need for foreign borrowing. Unlike households or businesses, a currency-sovereign government does not need to “balance its budget” by ensuring that revenues meet or exceed expenditures.

In fact, a deficit can be strategically beneficial if it leads to greater public investment.

Benefits of Currency Sovereignty

Unlimited Currency Issuance: The Australian government can issue money as needed to fund programs and infrastructure.

Flexibility in Spending: This flexibility means that in times of economic downturn, the government can ramp up spending to stimulate the economy without relying on external lenders.

Full Employment Potential: Currency sovereignty offers the government tools to achieve full employment by investing in job creation programs and public services.

2. The Government’s Focus on Surplus: Historical Context

The Legacy of Neoliberalism

The Australian government’s fixation on achieving a budget surplus can be traced back to the rise of neoliberal economic policies in the 1980s. These policies emphasize small government, deregulation, and fiscal austerity, often at the expense of public welfare.

Under neoliberalism, economic health is measured by fiscal indicators like balanced budgets and low public debt, rather than the welfare of the population.

The Political Appeal of Surplus

A budget surplus is often presented as a sign of good governance and fiscal responsibility. Politicians promote it as a way to safeguard the economy for future generations. However, this narrative ignores the social costs, particularly the chronic underfunding of critical services that disproportionately affects low-income citizens.

3. What’s Left Behind: The Underfunding of Social Services

Impact on Healthcare

Australia’s healthcare system, although strong in comparison to some countries, suffers from chronic underfunding. Hospitals are overcrowded, waiting times are long, and mental health services are severely under-resourced.

While the government aims for a surplus, healthcare professionals struggle with inadequate resources, leading to poor health outcomes for the nation’s most vulnerable populations.

Education and Inequality

Public education in Australia is similarly underfunded. Schools in lower socioeconomic areas often lack the resources needed to provide a world-class education, widening the gap between rich and poor.

Meanwhile, private schools benefit from significant government funding, perpetuating inequality. Shifting focus from a surplus to direct investment in public education could dramatically improve opportunities for all Australians.

Housing Crisis

The housing crisis in Australia is another area where the focus on a budget surplus undermines public welfare. With a growing number of people experiencing homelessness and a lack of affordable housing, it’s clear that more public investment is needed. Yet, the government continues to prioritize fiscal austerity over long-term solutions to the housing crisis.

4. Why the Push for Surplus is Misguided

Misunderstanding Public Debt

The idea that government debt is inherently bad is a holdover from neoliberal economics. In reality, public debt for a currency-sovereign government like Australia’s is not the same as household debt. The government can always meet its obligations by issuing more currency.

The obsession with reducing debt at the expense of public investment fails to recognize that long-term economic growth and social stability come from investing in people, not just balancing the books.

Investing in Social Services as a Solution

By investing in healthcare, education, and housing, the government can boost overall economic productivity. Healthier, better-educated citizens contribute more to the economy, and secure housing improves stability and reduces social welfare costs.

Moreover, with full control over its currency, Australia can fund these initiatives without worrying about immediate deficits.

Case Studies: Countries that Spend without a Surplus

Countries like Japan have shown that high public debt does not necessarily lead to economic collapse. Despite running large deficits, Japan has maintained a high standard of living, robust healthcare, and a strong education system.

The United States also continues to invest heavily in its military and social programs, despite running consistent deficits. These examples demonstrate that focusing on a budget surplus is not a prerequisite for economic health.

5. The Role of Public Perception and Media

The Media’s Role in Promoting Fiscal Conservatism

The media has played a significant role in perpetuating the narrative that budget surpluses are a sign of good governance. Headlines often celebrate surpluses while criticizing deficit spending, without acknowledging the real-world consequences of underfunding social services.

This skewed reporting shapes public perception and reinforces neoliberal economic principles.

Re-educating the Public on Currency Sovereignty

One of the biggest challenges in shifting the government’s priorities is educating the public about the realities of currency sovereignty. Most Australians have been conditioned to believe that government budgets work like household budgets, and that debt is inherently bad.

Public campaigns and education efforts are needed to change this perception and explain the benefits of strategic deficit spending.

6. What Needs to Be Done: A Shift in Priorities

Prioritizing Public Money for Social Services

To improve the quality of life for all Australians, the government must shift its focus from achieving a surplus to investing in critical social services. This means reallocating public money to where it is needed most—healthcare, education, housing, and welfare programs.

Policy Recommendations

1. Increase Healthcare Funding: Redirect public money to ensure hospitals are fully staffed and equipped to handle patient loads, with a particular focus on mental health services.

2. Invest in Public Education: Shift more funding toward public schools to reduce inequality and provide every child with the opportunity for a quality education.

3. Address the Housing Crisis: Create a public housing program that ensures every Australian has access to safe, affordable housing.

4. Implement Job Creation Programs: Use public money to invest in infrastructure projects and public services that create jobs and boost economic growth.

Conclusion: A Call for Re-Evaluating Priorities

Australia has the unique advantage of currency sovereignty, yet it remains trapped in a neoliberal mindset that prioritizes budget surpluses over the well-being of its citizens. By shifting focus from surplus to strategic investment in social services, the government can create a healthier, more equitable society. This shift is not only possible but essential for the long-term prosperity of all Australians.

Question for Readers

How can Australia leverage its currency sovereignty to better fund social services and reduce inequality?

Call to Action

Share this article and start a conversation about how public money can be better used to benefit the common good. Visit our website for more information on currency sovereignty and how it can shape a better future for Australia.

Reference

Spending cuts credited for heftier second surplus, The New Daily.

 

This article was originally published on Social Justice Australia.

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Why Aged Care Funding Scrutinised, but Military Spending Not

By Denis Hay

Description

Examine why Australia questions aged care funding but not military spending, despite the country’s monetary sovereignty.

Introduction

Australia is grappling with rising demands for aged care services as its population grows older, leading to a $5.6 billion reform package to improve the sector. Yet, every dollar given to aged care is met with scrutiny, with questions about sustainability and affordability. In stark contrast, military spending – including the $368 billion given for the AUKUS submarine deal – goes ahead with far less financial scrutiny.

Why do we ask, “At what cost?” for aged care, yet overlook the same question for military projects? This article explores these double standards and how Australia’s currency sovereignty means the government has the financial capacity to fund both without compromising one for the other.

Disparities in Spending Scrutiny

I. Aged Care Reforms: Why “At What Cost” is Constantly Asked
A. Key Changes in Aged Care

The Australian government’s $5.6 billion aged care reform package aims to improve services for more than 1.4 million older Australians, helping them stay at home longer before entering institutional care. However, the reforms include higher means-tested contributions from seniors, raising concerns about affordability for lower-income individuals.

B. Challenges in Aged Care Funding

Australia’s aged care sector is facing significant challenges, even with the new reforms:
1. Workforce shortages – More than 300,000 workers are needed to meet the demand for aged care services, but underfunding is making recruitment and retention difficult.

2. Underfunding – The sector is still underfunded despite the reforms, with many care facilities still struggling to provide adequate services.

3. Increased demand – With Australia’s aging population expected to double by 2050, more funds will be needed to provide quality care.

Despite these growing challenges, aged care funding is constantly questioned. The $5.6 billion reform package was seen as necessary, but it came with a public narrative focused on budget concerns and intergenerational equity, suggesting the government is walking a financial tightrope when funding such social services.

C. Public and Political Scrutiny

Aged care spending is consistently subjected to public and political debate, with media coverage often emphasising the “cost to the taxpayer“ and generational fairness. Yet this intense scrutiny stands in stark contrast to how military spending is viewed, where multibillion-dollar defence projects move forward with little financial questioning.

II. Military Spending: An Unquestioned Cost
A. Overview of Military Expenditures

In 2023, Australia committed $368 billion over the next 30 years to the AUKUS submarine program, making it one of the largest military spending commitments in the country’s history. The overall defence budget for 2023-2024 alone reached $50 billion, marking a significant increase compared to previous years.

B. Justifications for Military Spending

Proponents of military spending often argue that defence investments are critical for national security, particularly with the growing military presence of China in the Indo-Pacific region. The AUKUS deal, which promises to deliver nuclear-powered submarines to Australia, has been framed as necessary for safeguarding Australia’s interests in the future.

However, this narrative ignores the question of cost. While $368 billion has been committed for submarines over the next three decades, far less attention is given to the financial opportunity costs – what else could be funded with such vast sums?

C. Limited Scrutiny on Defence Budgets

In contrast to aged care, military expenditures are rarely subject to serious financial scrutiny. Public debate around defence spending typically focuses on national security threats rather than the financial burden of these projects. Even when media coverage addresses military budgets, it rarely compares them to the costs of social services, leaving aged care and defence spending to occupy entirely different public conversations.

Australia’s Currency Sovereignty and the Real Limits

III. Australia’s Currency Sovereignty: Why “At What Cost” Shouldn’t Matter
A. Understanding Currency Sovereignty

Australia is a sovereign issuer of its own currency, the Australian dollar. This means the federal government is never financially constrained in funding domestic programs, including aged care. While resource limitations – such as the availability of workers and infrastructure – are real constraints, the government’s ability to fund these services is not limited by revenue or borrowing. Despite this, debates around aged care are often framed as if Australia runs like a household, with limited money to distribute.

B. The Real Limits: Resource Allocation, Not Finances

The real limitations on government spending are resource-based, not financial. With Australia’s monetary sovereignty, the government can fund both aged care and military spending without needing to ask, “at what cost.” The real issue should not be whether aged care is affordable but whether Australia is making the best use of its available resources, including labor and infrastructure. The conversation should focus on what kind of society we want to build rather than on artificial financial constraints.

C. Double Standards in Public Discourse

The double standard in how we view social versus military spending is stark. While aged care is framed as a financial burden that requires higher contributions from individuals, military spending is accepted without the same level of scrutiny. Why is it that investments in the well-being of citizens are questioned while investments in military equipment go ahead without question?

Rebalancing Australia’s Budget Priorities

IV. A Balanced Approach to Spending
A. Reallocating Funds for a More Compassionate Society

Australia’s government has the financial ability to distribute more resources toward aged care without compromising national defence. By reallocating just, a fraction of the $368 billion earmarked for submarines, the aged care system could receive the necessary funding to address worker shortages, improve infrastructure, and ensure that no senior is left without quality care.

B. The Long-term Benefits of Social Investments

1. Job Creation and Economic Growth: Investing more in aged care creates long-term economic benefits, including job creation in health and social services.

2. Improved Public Health Outcomes: Providing better care for the elderly reduces strain on the healthcare system and improves overall public health.

3. Greater Social Stability: A well-funded aged care system ensures that Australia’s elderly population is cared for, creating a more stable and compassionate society.

Why We Need to Ask Different Questions

When comparing the $5.6 billion given to aged care reforms with the $368 billion planned for submarines, it becomes clear that we are asking the wrong questions. Instead of focusing on the cost of aged care, we should be questioning why military spending escapes scrutiny. Australia’s currency sovereignty means it has the financial power to fund both defence and social services without needing to choose one over the other. It’s time to shift the conversation toward resource allocation and societal priorities rather than focusing on artificial financial constraints.

Question for Readers

Should Australia reallocate more of its budget from military projects to social services like aged care, or is national defence spending justified as it is?

Call to Action

If you believe Australia should prioritize the well-being of its citizens alongside national defence, share this article, and start a conversation about how our government can better use its financial resources. Explore more on how currency sovereignty can lead to more compassionate policymaking on our website.

Social Sharing

Share this article on social media to raise awareness of Australia’s budget priorities.

Reference

Aged care changes to ‘improve generational fairness’


This article was originally published on Social Justice Australia.

Like what we do at The AIMN?

You’ll like it even more knowing that your donation will help us to keep up the good fight.

Chuck in a few bucks and see just how far it goes!

Your contribution to help with the running costs of this site will be gratefully accepted.

You can donate through PayPal or credit card via the button below, or donate via bank transfer: BSB: 062500; A/c no: 10495969

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