Career politicians and political parties just can’t help themselves, they cannot resist the temptation, to spend, spend and spend our money and commit us to more expenses. They wilfully allow the cost of public infrastructure projects to significantly exceed the original (approved) estimate, sometimes by many multiples, and make pathetic, if any, attempts at reining in the cost of social welfare and health programs, and provide handouts and other fiscal promises leading up to elections with a clear view of buying votes. We, as a nation, need to put a stop to it.
Why – because the money could have been spent a lot more productively and it’s inflationary, reducing the value (the buying power) of our money. For those who do the family shopping, think of how much $100 bought you in groceries 10 or 20 years ago. It’s significantly more than today. For those who don’t do the shopping, consider this: Based on CPI figures, $100 in January 2000 had the buying power of $47.82 at the end of 2025. This 52.2% drop in the value of our money, is due to our State and Federal governments overspending, spending more than they generate in taxes.
We can stop politicians from destroying the value of our money. This can be done by removing their incentive to overspend, removing their capacity to overspend and by ensuring that they suffer adverse consequences for deficits.
The underlying problem arose when we moved off the gold standard to a fiat currency – an arrangement that gave government the ability to physically and digitally print more money, thereby adding to the supply of money in the economy. Simply, if you give people more money, they will want to buy more stuff, and the extra demand leads to prices rising. When prices rise you can’t buy as much with the money you saved.
Classic Liberals’ monetary management policies include the following:
One. Replacing our Keynesian approach to managing the economy with an Austrian economic approach. Whereas Keynesian economics advocates for market intervention, Austrian economists argue that it causes and prolongs economic crises and that it is better to leave the economy to its natural order through free markets. Some ivy-league economists contend that every financial crisis in history has been caused by government intervention, including the GFC which our mainstream media blamed on ‘greedy bankers’. Adopting Austrian economic theory would severely curtail both parliament’s and the RBA’s (Reserve bank of Australia’s) ability to manipulate the economy.
Two. Our political class should not have discretion on monetary supply, nor the RBA. The rate of monetary growth should be equal to the growth rate of real production (the rate at which the quantity of goods and services being produced is growing.) This rule would remove the ability of the RBA to acquiesce to political pressures to fund government deficits through money creation, which erodes the buying power of our money. This growth rate of real production would generally be set at our (Australia’s) long-term average growth rate of real production.
Three. Legislate that if government expenditure exceeds a certain (predetermined) percentage of GDP, all Ministers will lose their salaries until expenditure is brought back to within the limit. This should focus their minds better allocating our taxes, reducing fraud and wasteful expenditure and on growing our economy.
Four. Ensure that government does not increase its borrowings, rather focuses on reducing it. The problem with government borrowing is that loans bear interest and need to be repaid. In many cases, probably most cases, government ‘rolls over’ the debt – simply by securing a new loan to repay the old loan. While government can be reasonably confident that (provided it doesn’t become reckless in its monetary management) it will be able to refinance maturing loans, but it can’t be confident of the interest rate that will be payable on the future loan.
Five. The Reserve Bank (RBA) will no longer set interest rates – these should be determined by the market.
Australia should have no government debt, and twenty years ago (in 2006) had no debt, but due to reckless fiscal management our State and Commonwealth governments will soon be $1 trillion in debt. Our governments will not be able to repay that debt when it matures; it will need to be refinanced. If it were refinanced today (May 2026) government’s annual interest payment would be about $50 billion. Which raises the question – where would it get this money? Politicians around the world have mostly been too timid to impose the necessary austerity measures – cutting welfare and other government expenditure – so they tend to increase a raft of taxes and borrow more money. Increasing taxes destroys the incentive to work and drives the wealthy and ambitious to greener pastures, resulting in lower taxes collection in the future. These measures kick the can down the road – delays having to solve the problem – and increases the severity of the problem. That’s the path to poverty – the same path taken by once prosperous but now impoverished countries. Unfortunately, that’s the trajectory we’re on. It can be reversed but the only party showing (through their policies) any inclination to do it, is us, Classic Liberals.