JUNE 2003 EDITORIAL

An old adage in business says: “You have to spend money to make money”. Yet that is not the philosophy of the Federal government, which has long promoted itself as the economically responsible custodian of Australia’s fortunes.

On Budget night Treasurer Peter Costello once again boasted that Australia’s economy has been booming under his reign while other nations, such as the US, have languished. The good times had enabled the government to retire debt sucked out of the government’s coffers by the former Labor government’s “Budget black hole”.

Now Costello said it was time to give something back. After several years of surplus, he and Prime Minister John Howard jostled for bragging rights over who was responsible for the tax cuts that will buy taxpayers a milkshake each week.

Former Labor Prime Minister Paul Keating may have presided over the “banana republic”, but Howard and Costello may well be blending a “banana milkshake economy”. At issue is whether a Budget deficit is such a bad thing. After all, many economies around the world are deliberately in deficit. Their leaders reason that to make money they first have to spend it.

Rather than giving taxpayers a small tax cut that will make little or no difference to their quality of life, wouldn’t it be better to invest that money in the future by returning to the concept of a “knowledge economy”?

Yet that has not been the case in successive budgets. Government expenditure on R&D has declined to 0.66% since the Coalition took office in 1996, although the measures contained in Backing Australia’s Ability have stabilised the decline (for now). In contrast, the European Union and Canada have set a goal of 3% by 2010.

Expenditure on R&D is crucial to the fortunes of any nation, with progressive nations moving forward through innovation. By standing still we are actually falling behind.

Last month’s Budget gave a small increase to the scientific community (see p.44-45), but not nearly enough to bring Australia into the competitive 21st century. Our research infrastructure continues to age, CSIRO remains in limbo for another year and now deregulation of university fees makes an expensive science degree even less attractive to students.

The government must take a long-term view and invest the fruits of the booming economy in R&D and education. After all, if we can’t create our future during times of economic feast, how will we cope when the famine comes?

Guy Nolch
Editor