The Government's Spending Binge

The government has been on a spending binge this week.

It has announced it will fund the second Sydney airport because the main player in the commercial sector has said the business case doesn’t stack up. This $6 billion must be part of the ‘good debt’ that the Treasurer revealed we needed to incur during a speech last week.

Hand_plane.pngHis intention approach is to keep ‘good debt’ off the balance sheet and squirrel it away in government funded enterprises. The NBN is a prime example of such an approach. It also serves as a timely reminder of how foolish some of this expenditure really is.

The NBN rollout has cost tens of billions more than ever expected, failed to meet expectations and the government has had to 'lend' an additional $20 billion to finish the national rollout.

Even the most generous analysts expect at least that amount to be written off in the years ahead. That means the government has borrowed money on behalf of a company and has next to no chance of getting it back.

The total cost of the NBN is around $54 billion, about ten times what it was first envisaged to be when cobbled together on the back of a coaster by Kevin Rudd and Stephen Conroy.

One can only wonder what the final cost of a second airport will be under the stewardship of a government installed management.

It can be argued that part of this expected expenditure will be offset by proposed savings in the tertiary education sector. These savings will actually require students to pay back their HELP loans earlier in their careers whilst also modestly adding to the cost of their degrees.

Hopefully this will provide some incentive for students to actually choose degrees that will support them in establishing a career rather than a degree for degree’s sake.

As someone who loathed university, I have long held the view that a university education isn’t necessarily for everyone. Nor should it be a requirement for a fulfilling and prosperous life.

The key to post-secondary education is to learn a financially valuable skill; be it as a doctor, a dentist, a teacher or a plumber (to name only a few). University is necessary for some of those careers but education comes in many forms.

The newspaper cadetship produced some of the greatest members of the fourth estate whilst few of the current university journalism graduates are actually able to pursue careers in the field. Similarly, on-the-job training for trades or small business generally produces better outcomes than solely textbook based learning experiences.

We are even seeing some firms deliberately choose non-university graduates because they recognise tertiary teaching is too often indoctrination rather than education. Without adequate price signals, universities make millions putting students in dead-end degrees without a care whether their graduates get jobs.

In the United States, millions of graduates now find themselves saddled with onerous education debts and little chance of getting a job in the field for which they have been prepared. Student loan debt is over $1.4 trillion with 90 percent funded by the federal government.

We cannot let the same circumstance happen here. Post-secondary education is important but so is the requirement for it to deliver financial benefits for the student. After all, that will also deliver better outcomes for the country.

P.S. - Here's a satirical example from the United States...