What a Budget should do
- Created on Wednesday, 03 August 2011 10:00
- Written by Julian Amos
A budget is about revenues and expenditures. The present state budget shows that, on the revenue side, its main source of revenue - GST receipts - has fallen. On the expenditure side, monies paid on salaries and wages has risen.
Treasury has advised the Government that the state is living beyond its means and that left unchecked would enter a period of net debt, which is a situation where it needs to borrow money to pay the interest on monies already borrowed. Not a healthy situation if left unchecked. This is the basis on which the current budget has been drafted, and the Government has announced its intentions to avoid this scenario vis a vis employee numbers, closure of schools etc.
The Government workforce is a significant component of the Tasmanian economy, and needs to be managed properly. However, holding the proverbial “sword of Damocles” over the head of the entire sector, by creating a broad spectrum of lingering doubt and uncertainty has done nothing to promote loyalty, productivity or encourage personal spending. As a consequence, business confidence has suffered. Such an approach is not considered the best option.
The Budget is not only a document for reporting expected revenues and expenditures. It is – or it should be – a strategy document advising in what direction the government intends to take the state. As an editorial recently opined “The Budget should be about getting things done, not just balancing the books”.
If government funds are in short supply, then private sector funds will be necessary to ensure continuing growth in the economy. Yet, traditionally, private investment has shown a high level of volatility and relates to the level of business confidence and expectations for future economic growth. So in order to encourage the private sector, the Budget should also be about establishing a growth mentality as a prerequisite for fostering private investment. However, neither the Government’s budget, nor the Opposition’s alternative budget, provide such direction. The budget has ceased to be a policy document, and has become one of financial management alone.
In fact, it has exposed the current style of government and political thought as “managing for the moment”. A budget must be presented with a future in mind, rather than simply balancing the books. To not do so defines a lack of direction.
State Governments are the providers of essential government services to ensure a sustainable, thriving and vibrant community. From an economic point of view, two areas of operational activity are the portfolio areas of Infrastructure and Resource Management, and Economic and Regional Affairs. However, government is also engaged in the economy by virtue of its own activity.
It buys goods and services
And yet...what is the policy for supporting local business?
It is both a tenant and an owner of buildings and property
And yet... what is the policy for property management
It builds things, or pays for things to be built
And yet... what is the policy for infrastructure funding, provision of housing, and hospitals?
It provides funding support, such as JV arrangements, incentives and subsidies And yet... what is the policy of industry support?
It employs people, who spend
And yet... what is the policy for the treatment of its employees?
It regulates through its planning laws, regulators and appeal processes And yet...is there an overarching planning strategy?
It promotes a Brand
And yet... what is the nature of its connection to its intended beneficiaries
The items mentioned above are not just activities, they are also levers that government can manipulate to drive the economy forward. Yet they lie idle. In none of these areas is there a policy, at least, not one that is understood and enunciated. In fact, there is a feeling that the lack of direction has become a dead hand on economic activity.
Government needs to recognise it is a leader, not just a manager. Managing the status quo for the moment and without direction or growth inevitably and inexorably leads to sclerosis and a slow death.
We can do better.