Imagine being treasurer on budget night.

Every colleague arrives with a worthy cause and an open palm. Defence wants submarines. Health wants hospitals. Aged care wants staff. Infrastructure wants concrete. Education wants teachers. Housing wants subsidies.

The regions want roads. The cities want rail. The arts want saving. Industry wants incentives. Backbenchers want local vanity projects. Ministers want legacy programs with their names on it. 

Everyone wants something, provided the treasurer pays for it. The treasurer’s job seems simple but brutal to me – say yes rarely, say no often and somehow find lots of money. 

For decades, the easiest place to find money was the Australian worker’s payslip. In the last budget, just over half of all federal tax revenue came from personal income tax. It is reliable, hard to avoid and politically familiar. 

But it is also where the system is starting to creak. 

Wealthy government that feels poor 

Australia is a rich country, and its government is rich too.

The Commonwealth owns assets worth roughly a trillion dollars. Roads, rail, defence equipment, schools, hospitals, land, plus some financial assets like the Future Fund, the student loan book and stakes in companies such as NBN Co.

Yet every budget feels tight. Every dollar is fought over. 

How can we be rich and poor at the same time? 

Because most of what the government owns is illiquid and low-yielding. This means the government has valuable assets that don’t generate much cash.

A highway does not send a cheque to Treasury, but only indirectly helps the economy through improved connectivity. A public hospital does not generate cash, but only makes people healthy. Even the most valuable assets are designed to deliver services, not cash. 

I would argue our government’s greatest asset is not even on the balance sheet. It is its legal right to tax 28 million Australians (and the businesses they operate) and regulate a continent that is packed........

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