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.