2 Mar 2015

Australia should not be frightened to borrow when rates are at a record low to build infrastructure.

Based on an article by : Richard Dennis

The biggest fiscal problem Australia faces is that we are not borrowing enough to meet our short-term circumstances or long-term objectives. Australia's population will nearly double by 2075. We are currently growing by around 400,000 people –  the population of Canberra –  every year.

There are three main ways that we can deal with the enormous cost of the population growth. We can increase taxes, we can cut spending on existing services, or we can borrow money.

The fairest and most economically efficient way to fund the upfront needs for all that social infrastructure is to borrow the money and repay it over the very long life of the assets –  especially when there are record low interest rates.

The least fair, and least efficient, way would be to cut pensions and spend less on health. Needless to say, the Abbott government has opted for the latter.

Why have they opted for the latter, its because they have fed us the fear factor of deficits so much they now believe it themselves. Businesses run on borrowed money and so do governments, and if its done wisely it can benefit all.

Australia's budget is nothing like a household budget as we have been led to believe by Mr Hockey, this is a country with multitude of resources and managed correctly can be the luckiest country

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