There's a better return on higher education than a coal mine
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There's a better return on higher education than a coal mine

Sensible policy making is always worthy of praise - but it's worth asking why the government is making this sudden about-face about the deficit.

The nation has been tantalised with teasers from next week's federal budget (it's going to be about housing affordability! It's not going to be about housing affordability! It is and isn't and is again going to have a plan to raid retirement savings for house purchasing!) but last week there was a big change: historically high levels of public debt is now fine, apparently.

It's an abrupt change from the Coalition's rhetoric of the last decade or so which might take a little while to get used to, but Treasurer Scott Morrison is now keen to distinguish between "good debt" and "bad debt".

And it hasn't taken long to work out exactly which is which either.

In a nutshell, good debt money borrowed is for things that offer a strong return on investment, while bad debt, conversely, is money spent on recurring expenses that don't offer investor returns.

Treasurer Scott Morrison.

Treasurer Scott Morrison.

Photo: Andrew Meares
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Now, the switch from the debt'n'deficit disaster rhetoric of the Tony Abbott years to this new debt-has-its-uses paradigm has one obvious benefit in that it's actually true. And when one is used to surveying the topology of the Australian political liescape, that's a rare and wonderful thing.

Indeed, so rare and wonderful that it looks downright suspicious.

That's because the rationale for the government's more nuanced take on how economics works has less to do with a sudden zeal for rational policy and more because the alternative is to do something about the nation's level of debt – which happens to be at an all time high now.

And since fixing the deficit would obviously require some sort of revenue increase – most obviously in the form of taxation, and especially in the form of taxing businesses – the only acceptable alternative is to turn staggering levels of debt from a curse into a virtue.​

It's not hard to see how that might play out given the government's very specific set of priorities.

For example, Morrison made clear that education and health is in the second category, explaining that "Medicare is important, education is important… that's why you need to ensure that your current expenditure can be met by your current earnings, and that you ensure the dollars that you bring in each year from the taxpayer cover everyday expenses on education and health and things like that."

See, infrastructure is worth borrowing for; health and education are fripperies which need to support themselves with the tax base. And just in case you didn't grasp what they means, all you need to do is read the report today that the budget will contain cuts to university funding, plus earlier repayments for the Higher Education Contribution Scheme and an increase in course fees.

That's in keeping with spending on education being dead money, unless you assume that Australia might continue to exist beyond the next few years.

After all, if you were trying to build a secure, prosperous future for the nation right at this moment in history – as traditional blue collar jobs vanish and employment becomes more parlous across the board – you'd probably not be explicitly ensuring that only those people with wealthy and supportive families could get the degrees necessary to enter the job market, surely?

Similarly, the government is still indicating it is amenable to a plan to lend Indian mining conglomerate Adani the $900 million it would like for a rail link to the proposed Adani Carmichael Mine in Queensland, with Resource Minister Matt Canavan now claiming it would create 16,000 jobs – a number which appears to have been plucked from the increasingly-smoky air.

After all, Adani itself has admitted the project would employ under 1500 people in the construction phase (although barely any in the automation-heavy "mining" phase), and in any case it's a loan which Australia would get back – provided, of course, that the mine becomes profitable in a world with tumbling coal prices which the world's largest coal mine would cause to plunge further.

That's the reason Westpac gave for declining to consider investing in the project late last week, joining the rest of Australia's largest banks, and is in line with the Queensland Treasury's report that the mine is "unbankable" which both the Federal and Queensland state government have chosen to quietly ignore.

And this makes exactly as much sense as deciding to stop spending dead money on wasteful lunches for one's children and to put the entire the household budget on Jobz'n'Growf in the third at Randwick.

After all, the return on investment for the latter is vastly greater than the former, provided that you don't take things like risk or consequences into account.

And that, excitingly, appears to be the plan.

The new Australian-value-packed edition of the Double Disillusionists podcast with Andrew P Street and Dom Knight is up now, with special guest Janine Perrett (Sky News), and tickets are on sale now for the next Double Disillusionists Live event at Giant Dwarf on Tuesday 2 May with guests Mark Humphries (The Feed) and former NSW premier Kristina Keneally.

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