Costello wiped the debt, then Labor blew it. By Judith Sloan in The Australian.
When the current Treasurer, Jim Chalmers, brags about Australia’s relatively low government debt by international standards, Costello must surely be choking on his Weet-Bix. Look at the figures — it was all Costello; Labor has made it worse.
When Costello became our top money man, Australian government net debt stood at $96bn or 18 per cent of GDP. When the Howard government was voted out in 2007, net debt was minus $40bn or minus 3.4 per cent of GDP. It was a tour de force that was never supported by the Labor opposition. …
Let’s not forget that vocal advocacy for some of the government’s biggest current programs was around in Costello’s day — think here the NDIS, the Gonski school-funding model and the like. His firm response was “no”, followed by the obvious point that funding for disability, education and many other matters rests with the states. …
Annual government spending is now well over $800bn, having been less than $500bn before Covid. Government spending on the so-called “care economy” has risen by more than 50 per cent since the Albanese government was first elected. …
Chalmers: It hasn’t been done properly before:
As a firm believer in big government, Chalmers thought he had all the answers when he claimed he could reinvent capitalism. What he didn’t count on was the persistence of inflation and the role that excessive government spending plays in that outcome.
Debt, debt, debt — welcome to the next decade of politics:
The cost of government debt is about to escalate. He talks about boosting productivity but can only cite trivial measures while avoiding the main game – energy and industrial relations. We are stuck with sub-par economic growth and no way of escaping.
Alexander Downer in The Australian:
There is another cost that rarely appears in the announcement: what cannot be built because government has commandeered the people and materials. Engineers, electricians, concrete suppliers and construction machinery are not available in unlimited quantities. Public projects compete with private investment and, where their requirements overlap, with housing construction.
When governments accelerate enormous building programs in a constrained market, they drive up wages and material prices, delay other projects and make new homes more expensive. Announcing a housing target does not conjure another electrician into existence. …
Governments should stop promising to build everything simultaneously and then claiming some war thousands of kilometres away is the cause of prices rising! …
What is needed is a return to economic rationalism: rigorous assessment, realistic sequencing, transparent borrowing and the courage to defer projects that cannot justify their demands on the economy. The test of leadership is not whether a premier or prime minister can announce another project. It is whether they can explain why another worthy proposal must wait its turn for funding. …
Lionel Robbins famously placed scarcity and competing uses at the centre of economics [in 1932]. Politics does not suspend that reality. Winning an election does not increase the supply of skilled labour or repeal the cost of capital.
Some resources will always be scarce. After security, the main job of any state or economic system is to allocate those scarce resources.
Even in Elon Musk’s upcoming era of super abundance of material goods due to AI robots (won’t happen — there isn’t enough metal, for instance), the time of notable people will still have to be rationed, and houses with nice views will always be scarce. There’s always something.