So, A Surplus is Good, Is It?
I am not an economist, but some things just don’t add up. Forty years ago when I did economics at high school I was told by my teacher that robust economies should never have a surplus. This is because the world of international finance thrives on deficit: deficits are good because they encourage international lending and domestic spending. This in turn promotes domestic and world-wide wealth and prosperity.
Was my economics teacher wrong, or have things changed in 40 years?
I suspect he was right. I also suspect that the Australian government is so out of touch with reality and with the wishes of the Australian people that they have forgotten their high school economics. For some obscure reason, Julia Gillard and Wayne Swan believe that moving in just one year from a 45 billion dollar deficit to a 1.5 billion dollar surplus will get them back into government at the next election.
How lame-brained is this Gillard Labour government? In order to create a surplus they have taxed the mining sector to the hilt, cut armed services spending by more than 4 billion dollars, as well as much needed assistance to state governments. All the state premiers are angry and disillusioned, and well they should be. For the sake of winning the admiration of all the other world leaders and of winning an election next year, the Gillard government has thrown the country into economic turmoil.
Gillard and Swan claim that they were able to bring this miracle about because of the mining boom. If it’s the mining boom that has been responsible for this surplus, shouldn’t we be encouraging the mining sector rather than taxing it into oblivion? There is nothing wrong with having a deficit, Julia. In fact, I believe that most Australians would have preferred a deficit, along with a little more generosity towards state governments to help fix our ailing roads, hospitals, police forces, schools and public facilities. This in turn would create jobs, prosperity and general well-being – and even a little goodwill towards our failing government.
The Gillard government I believe has made yet another terrible error of judgement. I can’t wait for the election. I wonder how many more errors of judgement they’ll make in the mean time.