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March 07, 2005
economic wisdom as a fashion
As the pennies start to drop about the need for infrastructure investment in road, rail, water and energy, we have a 'blame the states' campaign being run from Canberra. The states now stand accused of squandering their GST revenue on recurrent rather than capital spending.
What is not being said is that the economic wisdom for the 10-15 years has been fiscal restraint---budget surpluses, paying off public debt. So public infrastructure was run down, and there is now a huge backlog of work that needs to be done.
You will not hear that argument stated, as the Costello campaign is designed to shift public attention away from yesterday's bad economic news of low economic growth and big current account deficits.
In this political campaign the neglectful Labor states are seen as a handbrake on economic growth and as strangling the private sector. So argue Tony Smith and Greg Hunt in an op.ed in the Australian Financial Review(p.55)
Today the economic wisdom is 'spend up big' on infrastructure. Reinvest in infrastructure big time is the new line.
Funny how the Commonwealth's hands are so clean on all of this. Have they been investing in infrastructure? Should they not have been investing in infrastructure as well?
Posted by Gary Sauer-Thompson at March 7, 2005 07:44 PM
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