I can't quite understand why all the fuss over
government spending. We need jobs. We need to plug
the many problems that have arisen as a result of
the pandemic. The government is doing what it needs to do.
This should not be about politics - and blame. It's the
outcomes that matter - this is not a football game -
and choosing sides, and which team you support. To do
nothing is not an option. And whinging about it and
finger-pointing doesn't help.

Having a surplus while the country goes down the gurgler
would not be the right thing to do.

The Coalition's socialist budget confirms that gross federal government debt will exceed $1 trillion for the first time in Australia’s history. Gross federal government debt is now equal to 45% of GDP, which is more than double what it was during the Whitlam-era.

Foxy the reason why people are concerned about government spending (in general- not just now with the pandemic) is because there is a essential difference between government spending and private for creating general business activity.

In the case of private investment if someone wants to start a profitable enterprise they need to read the signals the market is sending to discover a business opportunity. If they don't interpret the signals correctly they will be sent broke. For example, someone selling snow-ski gear at Marble Bar in WA will almost certainly go bust. Or if instead they find an opening but fail to produce the good/service at a competitive price - they will go bust. Or yet further if in addition to a good business prospect, a competitive production cost but they try to sell their wares way above what the market signals that it will pay - they will go bust. It should be noted that in these situations the business failing is a very good thing. Here the economy acting properly and penalising bad investment/poor pricing. Basically the economy is pruning itself and removing its dead wood. If you ever had an economy where no-one is ever bankrupted then there is something fundamentally wrong with it.

But when it comes to the government, it is a very different kettle of fish. They can produce any product indefinitely without any regard to the market signals because they can offset the production cost to prevent from going bust. They can also indefinitely produce many singly different products successively but each a failure because they can offset the production cost. So how do they offset the production cost to cover the losses and thus sustain the uneconomic investments? They have two options:

1) get income for themselves via tax
2) print money (which they do via going into debt)

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However, in the case of money printing it will eventually cause general inflation after the money finds its way into the wider economy and is evenly spread out. So in the end, money-printing inflation acts just as another tax; an iniquitous tax that mainly affects the poor. Inflation has hardly any effect any wealthy people like me because typically the vast majority of our wealth is not money but rather assets like land, shares, gold, artwork, etc., that's value rises with inflation. Whereas the poor, if they have any non-cash assets at all, will have a higher proportion of their wealth in cash and thus will suffer worse from inflation.

Now what I've said so far is especially true in the case of bad government investment for things the economy doesn't want/need. However, if the government spending injection was to satisfy a true market need/want then it is possible that the overall increase in economic activity will be greater than the effect of increased taxation or inflation used to pay for it. The problem here is though, how is the government to decide what is a good investment?

HI Thinkabit,

The government is in a $53 billion better position then
it thought it would be.

It's budget targets big welfare programs and plugs some
problems - including aged care and women's issues.

It is investing in massive rail and road upgrades.
Projects that require hundreds of labourers, engineers,
and skilled tradies. It is investing in working families,
child-care subsidies, first home buyers, senior
Australians. Low and middle-income earners will be helped
with government extending its low and middle income tax
offsets for another year.

There will be apprentices and traineeships as well as new
training places to help employed people upskill -
and the list goes on.

Being a wife, mother, and grandmother, I approve of what
the government is doing. Investing in people during a
pandemic - will help the country to recover.

Albanese's reply to a budget that could have been brought down by Labor will be interesting.

Perhaps he can tell us how the gigantic debt caused by this budget, which includes $12 million for a bunch of girls playing netball, will be paid off. The Treasurer didn't tell us, being intent on buying votes.

Judith Sloan, who certainly knows more about economics than Joshy and Scotty, can't find any evidence that many of the so-called economically beneficial stimulus measures such as increased childcare subsidies actually deliver what it says on the pack.

There was nothing said about cutting some spending in areas that could be cut. But, if you can hand out $12 million to the Matildas, there is nothing that you would consider unnecessary. Taxpayers have been treated with utter contempt.