I cant see why youd want to borrow to fund superannuation liabilities. Arent you just shifting from one liability to another (the value of future loan repayments) doing this?

I totally agree. If it is so simple to borrow money, invest it at a higher rate and watch the money roll in, why don’t we take this to the logical (but absurd) conclusion (i.e. borrow a few more $trillion) and then we can all sit back with our feet up.

Its not clear to me what institutions could deal with it since it seems to me that the basic problem is a cultural one (I’d be happy to read suggestions) — Australians don’t appear to care much for political corruption in the form of pork baralleling (or perhaps politics in general for that matter — I imagine if voting wasn’t compulsary, we would get turnouts like the rest of the Anglosphere to prove this). From casual observation, if Iemma can stay in power and Bracks can dredge the bay and build a slow train to Ballarat, I really wonder what these guys would have to do for people to care.

(No need to answer.) :)

I note that you describe John Q as a “research economist and commentator”, rather than an “economic journalist”, as you once referred to Paul Krugman. ;)

Bob Walker of U Sydney has made a similar point (about debt, not about John Q) in his submission, noting further that the net government debt in Oz is negative, and it’s kinda silly to be so preoccupied with government debt levels after it’s essentially all been paid off.

Patrick, I’m a little taken aback that you think you differ with me on the proposition that a market is a good idea – in other words that we shouldn’t pursue the North Korean model. Am I missing something?

And in any case, as I keep saying, if you think the present value of future superannuation liabilities should figure on your balance sheet then surely the present value of future tax revenues – the means by which they were always intended to be funded – should also be on the balance sheet. To put one on without the other gives a most misleading picture of your net asset position.

But whether or not theres a legitimate case to privatise the electricity industry on productivity grounds, if NSW were being run like a prudent business, it would use the strength of its balance sheet to expand its investment in assets which generate higher returns than the interest cost of funds it borrows.

And as would occur in the private sector, the decision about what credit rating to target would emerge from a proper financial analysis taking into account the costs and benefits of securing AAA rather than populist political posturing.

I think it does make sense for governments to borrow, or stop. Ie if you don’t own any roads (or whatever else) fair enough you don’t need to borrow – the private sector owners will. But if you do, then presumably you expect a sufficient return on them to justify borrowing to sustain them.

Where we may differ is

– I believe that governments should also be ready to abandon any (ie) roads that it doesn’t expect a sufficient ROI on to justify borrowing to maintain, and
– that I believe in at least some privately owned assets per se as I believe that a competitive market is very very very likely to be more efficient and innovative than a purely state-owned market in any medium or long run.

As a result we dont regulate … shopping hours.

WA doesn’t seem to have received that memo yet. Any chance of sending some cluestick over?