Tuesday, 23 July 2019

If it is a priority, we can afford it

SAYING we cannot afford something is code for saying it’s not a priority. We are a rich society. We have all the resources we need to deliver better housing, health, education and infrastructure, but we choose not to. We are constantly told we cannot afford them and we need to live within our means.

Imagine for a moment Australians were shipped to a desert island, a new paradise. All facilities were there, infrastructure, schools, hospitals, even a new K Block. Lots of people with all the required skills are ready to start working, but nobody has any money. Neither does the government nor its bank, the Reserve Bank. Nor do private banks or any residents or businesses. The government cannot raise taxes or borrow money because there’s no money to pay the taxes or lend to the government. Gridlock. What would happen?

One practical solution would be for the government to simply start spending money by crediting accounts. Hospitals would be paid enough to operate. So too schools and other government departments. Workers could then be employed and paid. Money would start circulating. Some will return to the government via taxes. Businesses and residents would start borrowing and spending. Without government spending in the first instance none of this would not be possible.

Most of us have been led to believe the opposite, that the Australian government must raise money before it can spend.

It’s not true.

Some people would regard this solution as heresy.