Victorian budget 2007 - the biggest spending spree in history

Taxes are bad news, that seems pretty obvious. Nobody is happy giving up their hard earned property. Government spending is also bad news. It "crowds out" private spending. Why would a private company build, fund and manage roads or hospitals or schools when there are so many publicly funded alternatives out there who have an unlimited budget ?

So yesterday's budget, Premier Bracks' 8th state budget, was terrible news. Here is how your money is being flushed down the toilet and is used to distort what would otherwise be a free and unregulated market:

• $1.9 BILLION to slash surgery waiting lists and redevelop 110 hospitals and health clinics.
• $510 MILLION to build and redevelop 2350 low-cost public and community housing homes.
• $904 MILLION for education, with more than half to be spent on rebuilding and upgrading schools.
• $872 MILLION for public transport, including $362 million to bring forward by a year the delivery of 10 new trains and 22 extra drivers.

All of the new pork projects above are bad news. You don't simply improve "health" or "education" by throwing money at it and letting bureaucrats allocate it to some overly complex system. Despite what the teachers and nurses unions would have you believe, it makes little or no difference, and the money gets wasted on administration and bureaucracy. The public sector has been about creating "jobs" - not in the real economic sense, but in the sense of government stealing money from real jobs and valuable transactions by the way of income taxes, and allocating to without any market mechanisms or pricing signals, towards employing administrators, bureaucrats and PR spin doctors, as well as some amount towards hospital beds and classrooms.
The private market has no problem allocating resources as effectively as possible as it has to rely on price signals and is exposed to market forces, i.e supply and demand.

But not all is lost - some of the good news are marginal tax cuts, which is quite surprising given the track record of the Victorian ALP when it comes to spending big.

• A 2007-08 surplus of $324 million, with average surpluses of more than $400 million in the next four years.
• $668 MILLION in cuts to WorkCover over four years, and $508 million in land tax cuts.

But the status quo is not a pretty one, when you read the following :

• A record tax grab of $11.6 billion is expected over the next 12 months, and fines and fees will boost coffers by a further $843 million.

And somehow the bureaucrats of the ALP have a crystal ball and can see into the future !?

The Victorian economy will grow by 3.25 per cent for the next two years, up on the 2.75 per cent growth for 2006-07.

I will continue to pour through the budget documents and find the total outlays on health and education and will post more later today.