NEWS | Anne Lim
Thursday 15 May 2015
A Christian economist has called for the government to take the lead in spending on infrastructure to stimulate the economy out of its rut.
Hans Kunnen, chief economist at St George Bank, said now was a good time for government to borrow funds on international or domestic markets to finance productivity-enhancing infrastructure.
“I think we’re over-obsessed with the notion that debt is bad,” he said. “Debt can be good. We’re already running deficits and if we could explain to people that borrowing to build infrastructure pays for itself, and is a reasonable idea – especially with interest rates as low as they are an economy in need of a pick-up in activity.”
Mr Kunnen said the problem with last year’s budget was that it created so much antagonism in the community that it hurt consumer confidence, which then hurt business confidence, which was bad for everybody.
“Last year they realised got it wrong and they needed to build a few bridges and reduce the temperature in the debate,” he said. “This year, by taking a lower key approach you can upset fewer people and keep it out of headlines, which will allow for rational debate, which will be in all our interests.”
Ross Gittins, economics editor of The Sydney Morning Herald, also called for more spending on infrastructure as a stimulus to get the economy out of its rut.
“It’s a funny thing that they’re saying have a go and spend money and invest but they’re not doing nearly as much as they should, and they have far greater capacity to spend than any households, which probably feel they have all the debt they can cope with,” he said.
While he felt this year’s budget was greatly improved in terms of fairness, he believed the government could have done more to hasten a return to budget surplus by keeping a lid on recurrent spending.
“Although this seems like saying the opposite, it is reconcilable, because in the short term you can do a lot more spending on infrastructure because it’s not clear that all the cuts in interest rates are potent enough for us to be confident that the economy will pick up,” Mr Gittins said.
“Provided you build sensible things they are going to be of value to the community for 40 years or more, if you have to borrow it’s not terrible and will deliver great social and economic benefit. It will improve the functioning of the economy and create more jobs for people at a time when all construction activity in the mining boom is falling off rapidly.”
For small businesses, however, this budget was the best in 40 years as far as Christian business coach Steve Wanmer is concerned.
Mr Wanmer, who runs Action Coach in Brisbane, said the tax cuts and $20,000 capital expenditure allowances “put the ball into the court of small and medium businesses and that is 95 per cent of businesses in Australia”.
“It’s my observation that the government is counting on small business to positively grasp this opportunity. It’s up to small business to get rid of any shackles of negativity that have held us back and to lead the community by being the most positive people that we can possibly be and as the government is saying ‘have a go’. If you don’t, you will miss the best opportunity you are likely to have and from a Christian perspective small business is the cornerstones of a prosperous community.”
Christian economist Paul Oslington was most concerned about the unprecedented cuts to overseas aid in this week’s budget, calling them “hard-hearted”.
Professor Oslington, professor of economics and dean of business at Alphacrucis College in Sydney, said he was really sad that Australia was cutting back aid to the poorest parts of the world when, despite our current economic woes, we are an “incredibly wealthy nation”.
“It seemed hard-hearted,” Professor Oslington said, referring to the biggest cuts to Australian aid in the programme’s history, with aid to Indonesia cut by 40 per cent and aid to Africa and the Middle East reduced by almost 75 per cent. “You can point to lots of aid debacles but a lot of the aid, particularly channelled through non-government organisations which tend to work with local communities, tends to be effective in health and educational, and community building. So it really does sadden me that we’re cutting the aid budget, particularly to Africa.”
The result was that a lot of “fantastic projects” run by organisations like World Vision, which improve health and education outcomes for people at the bottom of the economic pile, would not be funded any more. “We tend to give for emergencies but it’s sad to see the long-term development stuff savaged.