The federal budget is adding to demand while the Reserve Bank tries to contain inflation. Cutting public services isn’t the only answer. Australia could start by getting a fairer return from its mineral and energy wealth.

In case you haven’t worked it out, I’ll put my cards on the table: I want bigger, not smaller, government. There’s no end to the services the government could provide for us, if this was better than some of us paying the private sector to do it while those who can’t afford it miss out.

It follows that there need be no arbitrary limit on how much government spending may be done, whether as a proportion of the economy (gross domestic product) or anything else.

But my training as an accountant tells me there’s no magic fairy who pays for all this spending. So a bigger-spending government is one that needs to raise taxes. Fine by me – so long as the well-off (including yours truly) pay more than the less well-lined.

I don’t delude myself that the burden of additional government spending can be covered by taxing the James Packers of this world – there aren’t enough of them.

Although the economy is hardly growing fast, the Reserve Bank is worried that the production side of the economy – the industries, businesses and workers producing goods and services – is close to full capacity. It fears that, unless we stop growing or even go backwards for a bit, demand will exceed supply, causing the rate of inflation to worsen. It’s already above our target of prices rising by only 2 to 3 per cent a year.

So........

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