Our Government has Dr Evil’s budget management skills

Our Government has Dr Evil’s budget management skills

Our Government has Dr Evil’s budget management skills

While the government and opposition are both busy comparing innovative ways to hold everybody by the ankles and shake them, they don’t have a true appreciation of just how much money is already falling out of our pockets.

In fact, when I repeat the old line about “a billion dollars here and a billion dollars there, pretty soon you’re talking real money”, quite a few politicians fail to realise it’s not really a joke.

Indeed, like Dr Evil in the Austin Powers films, some don’t seem to know or care about the difference between $1 million, $1 billion or $1 trillion. For many in Canberra, money is an abstract concept rather than the result of ingenuity and hard work by millions of people. Moreover, our largely innumerate media class is not about to call them out.

One way of returning budget numbers to a scale we can all understand is to compare it to a household budget. For example, try wiping off seven zeroes from the latest budget numbers. Looked at this way, the federal government is like a household with an outstanding credit card balance of $23,872. And despite this scary debt, and despite earning only $39,489 a year, the household still decided to spend $42,834 this year. So that’s an extra $3739 on the credit card.


It wouldn’t be so bad if this spending in excess of earnings was a one-off, arising from a need to pay for a longstanding and unavoidable expense. But the government’s inability to manage its budget is not a one-off. It spent more than it “earned” in each of the past seven years. It plans to spend more than it “earns” in each of the next five years. And every half year, it comes up with new discretionary spending, far in excess of any decisions to cut back on spending elsewhere.

What’s worse, all the government’s figuring is built on economic assumptions so optimistic I suspect they’ve been smoking funny cigarettes down at Treasury.

None but the most spending-addicted, short-term fixated, devil-may-care, dysfunctional household would run a budget like this. And yet we are all essentially forced to hand over our money to people who think this is a rational way to run the national household.

Which brings me to the subject of last week’s defence white paper.


As much as I am disinclined to hand out other people’s money, I fully accept that Australia needs a strong defence force, and that defence is an expensive business. As the saying goes, freedom isn’t free. And if we are to aspire to an independent posture on foreign policy, we shouldn’t be totally reliant on another country for our defence.

I also accept that an effective defence force requires submarines because, as the experts explain, there are only two kinds of naval vessels – submarines and targets.

But the defence white paper is riddled with unnecessarily expensive industry policy. There’s a commitment to mandate consideration of Australian industry when developing defence capability, complete with references to buzzwords like “innovation hubs”, “innovation portals” and “communication bridges”. There’s a commitment to continuous local building of frigates and patrol ships, despite South Australian ship builders botching the air warfare destroyer project.


Finally, there’s a commitment to significant Australian involvement in the construction of the submarines, driving up the cost to $50 billion. That’s a hell of a lot of money just to improve the election prospects of some South Australian politicians. A far better solution would be to give these politicians gainful employment any place they want, and then to buy or lease – at a fraction of the cost – proven, top-quality submarines from overseas, preferably modern, nuclear-powered versions that don’t have to surface as often.

Australia will not enjoy national security if our government becomes heavily indebted to the rest of the world. So the defence portfolio cannot be immune from spending restraint. But such restraint would make only a small contribution to resolving our budget woes. The budget deficit is so huge it far exceeds the sum of all defence spending.

Spending cuts are required across the Commonwealth government, including in the far bigger spending areas like education and health, and in the welfare system, which doles out more taxpayer cash than for defence, education and health combined. When the nation’s credit card is maxed out, it is unavoidable that we all need to share the pain.

From The Australian Financial Review, 3 March 2016