In business parlance, the Howard Government is running a "lazy balance sheet" because it fails to invest in upgrading the skills of its workforce (education), in upgrading the quality of its products and processes to meet the competition (research and development), and in speeding up communications with its customers and suppliers (telecommunications and transport infrastructure).
Any fool can sell assets to reduce debt, but it is a way of becoming uncompetitive and eventually going out of business. Since 1996, the Howard Government has sold infrastructure and cut spending on higher education. Its stock of assets has depreciated at a faster rate than gross investment, and programs designed to upgrade industry, such as the 140 per cent R&D allowance, were slashed - all in the name of reducing the deficit.
For the want of a few hundred million dollars a year to maintain these programs, business R&D, which was growing about 18 per cent a year in the decade up to 1996, has now slowed to a virtual standstill and the deficit on Australia's trade in elaborately transformed manufactures has blown out.
As a consequence, Australia's external current account deficit now stands at 5.4 per cent of GDP, and foreign debt is far larger than any other major industrial country apart from the US. (And keep in mind that the US is in the luxurious situation where its dollar is a reserve currency, which means that the US can pay for its imports by printing more greenbacks - at least until the OPEC countries pluck up the courage to follow Saddam Hussein's example and demand payment for their oil in euros.)
