In this episode of the Australia Together Podcast on Substack I read Parts 1 to 5 of Chapter 4 of my latest book, The Public Interest Economy: the path to wellbeing, security and sustainable consumption in a democratised Australian economy.
Chapter 4 is about how to arrange Australia’s economy in the public interest and I’ll start with sections about how Australians can take an influential role in this by using National Integrated Planning & Reporting – National IP&R – to build a long term plan for economic and resource sustainability.
This activity of collaborative economic planning by the community is key to defeating neoliberalism. It is possibly the only way Australians can overcome the poverty, inequality, loss of wellbeing and unfair taxation caused by thirty years of the dominance of neoliberalism and neoclassical economics in Australia.
The extent to which National IP&R is essential for both national economic sustainability and individual financial security should not be underestimated. But its effectiveness will depend on governments admitting the truth that, unlike households, they are fiat currency issuers and cannot run out of money.
Once governments acknowledge that truth, Australians can begin to work with them using National IP&R to establish an affordable and decent living standard for everyone. That standard cannot be established if our governments continue to adhere to neoliberalism and the neoclassical economics that insists that governments must balance their budgets and minimise debt.
The fact is, a fiat currency issuing government has much more room to manoeuvre economically and doesn’t need to slavishly balance its books. That is why the purpose of National IP&R is to help the government achieve what should be its true purpose, which is to enable every household to have the fairest chance to balance their finances, or more specifically, to ensure that every household can afford everything necessary for safety and wellbeing and that “living” itself is not beyond their means.
For its part, the government has all the tools it needs to arrange this. And the most effective tools at its disposal are:
taxation, and
the ability to set the composition of the economy.
National IP&R can enable governments to maximise the effectiveness of these tools so that all of us, not just some of us, can always afford to live.
Chapter 4 sets out exactly how we can utilise National IP&R to make that possible. It shows how governments, in managing the macroeconomy, can shift to using functional finance (see Chapter 2) but also use it in a fully effective manner. Put simply, the Chapter shows how we can make the best and fairest decisions about public spending and taxing.
National IP&R connects Treasury with the Australian community in a democratic exchange. It is the process by which we can work together to democratise the economy so that it works in favour of the public interest rather than against it.
The National IP&R process enables Treasury staff to open conversations with the community firstly to get the nation’s spending right, both in total and in a pattern that does not result in consumption of human and natural resources at rates faster than they can be renewed. Secondly, it helps them discuss how to distribute the necessary tax burden fairly and for purposes of resource conservation. Insofar as it helps to arrange these two lines of conversation so that they are orderly and efficient, National IP&R is the key to building an economy that is sustainable in the public interest.
National IP&R turns functional finance into effective functional finance. It turns macroeconomic management into effective economic management. So it is worth learning how to use it.
How do we use National IP&R to get public spending right?
Part 5 of Chapter 4 explains how Australians and the government can engage in conversations in the National IP&R process to select a program of public spending that will maximise wellbeing and thereby ensure that all human resources can be renewed so as to maximise economic participation and ensure that the economy is operating at full capacity.
A basic premise of these conversations is that austerity must never be permitted; it is not necessary for financial sustainability and it is harmful to wellbeing and resource renewal.
To maximise economic participation, the first step will be to ensure that tertiary education is once again fee-free and that all other barriers to entry to education are pulled down – meaning that welfare payments will need to rise.
I should foreshadow here this will necessitate the introduction of a universal basic income (UBI). Chapter 5 will deal with the issue of the need to transition from the current targeted welfare system to universal income security by introduction of a UBI.
These and other increases in public spending on “industries of wellbeing” are essential if Australians are to be able to build an economy capable of providing for everyone’s wellbeing at the lowest possible price and with the lowest possible taxation.
When conversations in the financial planning component of IP&R are held at the national level, the participants will be planning for an Australia with a bigger public sector and a smaller private sector. This is a good thing. It is the key to providing for everyone’s wellbeing at the lowest possible price and with the lowest possible taxation. It is the key to arranging an economy in the public interest.
How do we use National IP&R to get tax right?
Watch out for Episode 68 to find out how Australians can hold conversations in National IP&R to select taxes that are fair and that will ensure sustainable essential human and natural resource renewal.
Want to know more about functional finance?
For more information on functional finance, see Chapter 2 of The Public Interest Economy or see Extracts from The Public Interest Economy, particularly:
Table 1 – Key takeaways for macroeconomic policy and governance reform.
Box 1A – The rules of functional finance.
Box 1B – The most effective macroeconomic governance arrangement using functional finance.
Find out about National IP&R and how to get involved here.
Stay in touch for the next episode
Next Episode: Chapter 4, Parts 6 to 8 – In these sections I talk about how Australians can use conversations in National IP&R to get tax right. They are about how the conversations can be structured to help Australians compose the tax base, select the taxes most likely to stabilise inflation and to ensure the tax burden is fairly and efficiently distributed. These conversations will be essential to reduce poverty and inequality in Australia.
Listen to a full reading of The Public Interest Economy
You’ll be able to listen to a complete reading of The Public Interest Economy in weekly instalments.
If you wish to keep reading, the full book has already been published and is available on Kindle here. The paperback is available for mail-order here or click on the picture below. Or visit the Australian Community Futures Planning website to purchase The Public Interest Economy at https://austcfp.com.au/publications#public-interest-economy
Useful insights into The Public Interest Economy
Click on the picture to listen to a radio interview with Bronwyn Kelly about The Public Interest Economy.
