You have to spend money to Make money

The Queensland Government in the campaign for "Strong Choices" and also the federal Government commisioning a report on "cutting expenditure" and what can only be described as levvies, or new taxes. Debt is portrayed as the elephant in the room - the future Achilles heel of the Australian economy on its road to eventual default given "business as usual" or in this case "the current borrow and spend path"

This is a very simplistic and politically motivated picture painted by the current Government. However, it ignores unintended consequences. 

Many more times than it is supposed, an increase in a tax rate ends up reducing the overall tax intake - reductions in expenditure can reduce growth or cause recessions which further reduce tax intake. In essence, inceases in borrowing to invest can actually be a better tactic to bring a country back to "profit", even in a situation in which debt appears already high. Profit, in this case means a budget surplus. 

For all the push for austerity around the world, it doesn't appear to do a lot of good except as a punitive measure for not paying your bills on time. It does not make it easier to pay future bills on time.

The focus has to be on how the expenditure is an investment rather than consumption, and a view of the overall demographic direction of the country. Thus an older retirement age is a must no matter what, but lower pension rate not necessarily so. Of course investing in the youth througn generous family payment and youth allowance is an excellent long term investment, but it is often seen as an indulgent expenditure on middle class welfare.

Thus I am troubled by the simple-minded model of "you have to save money so that you have it to spend on important things later", and I think that Government has to just focus on a wide base of taxation, and long term investments and infrasructure.