Tim Colebatch, The Age's Economics Editor, Comments on Budget Surpluses and Infrastructure. (August 21, 2007)

    "[A]fter all that spending, in 2005-06 the Commonwealth (including universities) ended up with an operating surplus of $19.3 billion. It spent less than $5 billion on infrastructure, and ended up lending $17.3 billion into global financial markets." So writes The Age's economics editor in today's paper.

Mr Colebatch goes on:

Some call that responsible fiscal policy... But let's be honest: when governments run surpluses, it is because they tax more than they spend. There are times when that is good policy, and this is one of them. But in the long run, it makes no sense for governments to tax more than they spend, and then lend the surplus to financial markets.

 

Yet that is what both sides now promise us.

 

What we need is a sensible attitude to financing infrastructure spending, and last Friday Reserve Bank governor Glenn Stevens provided it. Appearing before the House of Representatives economics committee, Stevens flatly rejected Howard's claims that the states were to blame for interest rate rises. No, he said, it is the overall level of demand the Reserve focuses on.

 

Stevens emphasised that Australia needs increased infrastructure spending, and it will deliver a long-term gain to the economy. The MPs did not ask him to comment on governments borrowing to build infrastructure, but last year his predecessor, Ian Macfarlane, bluntly told MPs he had no problem with governments doing that.

Over the weekend Larry Smarr from UCSD told the Australian American Leadership Dialogue in Melbourne: "In Australia the universities are not at [the required] level … that's one of your most important challenges."

And as the federal Coalition preens about its budget surplus the nation's current account deficit continues to climb.

Is that really the best way to manage Australia?