The term “budget surplus” is bandied about a lot these days, particularly by politicians and the media. A budget surplus, we’re told, is a sign of “sound economic management”, and any government found not to be running a surplus in their budget are derided and hounded by pundits and opposition parties alike for not managing taxpayer’s money properly.
But are budget surpluses all they’re cracked up to be? In these days of economic uncertainty, it is seen as a sign of good government to be running a surplus, and to have money “in the bank”.
Let’s think of a budget surplus, a government budget surplus, another way. It is well known that the money governments spend on essential services and God knows what else, is taxpayer money. So, when a government says, “we have a budget surplus of $1 Billion”, what they’re effectively saying is “we’ve got $1 Billion of your money, that we’re not willing to spend just yet. In fact, we won’t spend it, and we may even increase it in the next budget.”
So, what would you rather? A government who takes billions of our dollars, only to “save some of it for a rainy day”? Or would you rather a government who spent all of the taxpayer money they collected on essential services, investments in infrastructure, and investments in jobs?
Sure, government debt is damaging – if it’s high, out of control debt. Just ask the Eurozone. But low, well-managed government debt, can be a sound way of managing taxpayer money, and an effective way of investing in the future of the populace. But of course, it seems all politicians and the media are programmed into thinking “debt bad, surplus good.”
In the event of a budget surplus, the taxpayers should have a case for demanding their money back. How you would divvy it up is another matter, but governments shouldn’t be allowed to just take our money, and then not spend it all. In essence, the populace is being taxed too highly if a government runs a surplus.
camdog87 
Yes, it’s very true that people don’t tend to put much thought into challenging the idea that a surplus is the ideal target. I’m sure many politicians don’t actually think that debt is necessarily bad and that a surplus is ideal. However, the government has been pressured into aiming for a surplus, not primarily because of opposition parties, but because this has become the accepted sign of good economic management in the broader population and the media, whether true or not, and Labor feels it has to achieve it to be re-elected.
However, even if it was to become evident and universally agreed that there should not be a large surplus or that there should be a certain level of debt, the clashes over levels of taxation and government spending will always remain. It is practically universally accepted that we need taxation and that governments need to spend money on essential services and important investments. However, what will never be agreed on is how much government (taxpayer) money should be spent, what it should be spent on and how much tax should be collected in the first place. Nevertheless, I suppose that’s what makes politics what it is and gives us opposing parties and opposing politicians. As long as contrasting attitudes and views are held in the wider population, this will be reflected every day in government decision making.
It is not necessarily Labor I am talking about – it’s any political party in power, and not necessarily in Australia. Look at the current Victorian State Government – slashing 3600 public sector jobs just to return a ‘sizable’ surplus in the next few years (the exact figure escapes me).
I agree that we will probably never come to a consensus upon how much taxpayer dollars should be spent on any particular area of government spending – what I’m saying is, we shouldn’t be having excessive budget surpluses, because in effect a budget surplus says to the voters “here’s some of that money you gave us that we didn’t spend, so we’ll hoard it from you, and not spend it on anything meaningful” (well, that’s how I see it anyway).
I guess that from the perspective of those who really go on about a surplus, who are more often than not on the right side of the political spectrum, it is definitely not seen as hoarding the money of taxpayers. The way they see it is that it is more responsible to ‘live within our means’ and maintain a small/reasonable surplus that can either be spent later if it’s needed or be used to lower taxes in the long term. For example, the Liberals are quick to remind Labor that it was their budget surplus that Labor inherited and which allowed them to hand out those economic stimulus payments without going into unmanageable debt. Now, of course, the problem will always be that unless we have an excellent understanding of the economy due to experience/background in economics it is very difficult to comment on what is actually an appropriate and manageable level of debt (or how large a surplus has to be to be labelled as excessive). It’s because the general public, including us, don’t have this expertise it’s very easy for governments (state, federal, overseas) to hijack any government debt as a key policy issue. Unfortunately (to you and me at least) it looks like the Liberals will have a pretty good chance at getting into power again and working towards their beloved cuts and savings, particularly with these latest leadership issues in the Labor party.
It’s basically cheap political point scoring, on both sides of politics. The more money a government can save, the better economic managers they are (or so they would have us believe). Have to agree with you about the Libs – they’re being handed the next election on a platter.
Regarding the general public, surely there are other people out there with similar views to myself, those with a bit better understanding of economics who could question this line of rhetoric publicly?
Anyway, this is good, I’m glad I’ve written something to generate debate, that’s getting people talking (well, politically minded souls like ourselves anyway).