A Government is not a household (or a business). It isn't run like one, it isn't funded like one and it shouldn't be budgeted like one.
Accounting principle is the same across all sectors "A = L + P". However, for government it is important to provide social, economic stability, law and order and basic services to the citizens. The books need to be balanced (surplus at boom time to keep a lid on inflation or limited deficit in recession to keep the wheel turning), whereas households and business should skew towards surplus.
How about the armed forces, police and legal system ?
Schools ? Hospitals and healthcare ?
Churches and other tax-exempt organisations ?
Tax rorts like negative gearing ?
Personally, in my opinion, armed forces, police and legal system, schools, hospital and healthcare are the foundation to achieve social and economic stability plus strong law and order. Those are similar to expenditure to our home security and insurance. Again, such expenditure needs to be balanced, living beyond one's mean would just lead to bankruptcy or long term financial hardship.
Lastly, I would like to see churches and NGOs loosing their tax exempt status. In some countries where there is no social/government welfare/safety net to assist those in need in the society, I actually see the need for NGOs.
As for negative gearing, I love it. It is what got me to the stage to allow me to fly J and F nowadays. The community actually need a balance of property investors to provide rental properties for various market needs. For example Defence Housing, it attracts investors to buy in and get tax benefit, on the other hand provide housing for defense personnel.
As for cost benefit analysis for Snowy Mountain and recession era projects, I would say back in those days the idea would be foreign to the government of the day. However, with today's computer aided economic modelling, it is actually not hard to do and can be done efficiently. In business, it is done all the time for capital investments. Even Melbourne's East-West Link...
Wow thats impressive !!! So when you took out a 30 year mortgage to buy your house you knew with absolute certainty what your earnings were going to be over that entire term !!!! That crystal ball is worth its weight in gold - maybe you could lend it to the Govt so that they can see future income with certainty before they invest in similar long term assets like .. say.. the NBN.
I don't have a crystal ball. But I know basic Maths and how to use Microsoft Excel.
Actually, I am about to commit myself to a 25-year mortgage on an investment property. I do have a clear idea on where I will be in 5-years with that particular asset. I am confident that I can service the loan (my job is not at risk in next 5 years, and I do have a cash safety net plus income insurance) for 5 years. After using conservative expenditure vs rental income, I am very confident that the asset will be self-servicing after 5 years where it will earn me income to secure my future even further.
It is my personal opinion, that accounting principle is the same for across the economy irrespectively of the entity. What is different is where the pendulum (Surplus vs Deficit) should swing, for Government/NGOs, in my opinion it should be close to Balance. For business and household, it should be solidly in Surplus. For businesses, even individuals, acquiring asset is always risky. We should never borrow to Consume, always borrow to Invest. Before investing in an asset, it is vitally important to minimize the risk, cost/benefit analysis should be done nowadays. Even with a spreadsheet, it is not hard to workout personal finance and access one's financial risk. For big organisations, there are teams of people specialised in this. I know it is contradictory to say never borrow to consume, but it is a necessary to use Credit (short term borrow to spend) but it must be managed and accounted for. In a simple personal experience, I use Credit Card to get the 55-Day Interest Free so I can earn 55-Days additional interest on my saving! Business has similar setup (90-Day, 30-Day Credit... etc), I am sure the governments out there does the same with Bonds. I am not a macro-economist, but I am just using my personal experience on what I feel is wrong with current government.
As much as I like to see Labor win the election, I don't have the confidence in them at the moment. I really hoped that Rudd really was a Howard Lite.
(would they go for the traditional female stripper or male!?)
