Where Does the Money Go? Understanding Government Spending

By Denis Hay  

Description

Government spending directs billions in public money – could it be used better? See what your government could fund instead of wasteful deals.

Introduction: When Numbers Lose Meaning

Location: A single mum in regional Queensland watches the evening news.

Action: The presenter says the government has committed $368 billion to nuclear submarines.

Thoughts: “I can’t even get my roof fixed. What does $368 billion even mean?”

Emotion: Frustration. Confusion. Helplessness.

In Australia, politicians casually toss around figures like billions and trillions. Yet, for most of us, even $1 million feels abstract, let alone a number with nine or twelve zeroes. But what if we could visualise these amounts, understand what they buy, and imagine how different our country could be if government spending were spent on us?

The Problem: Big Numbers, Bigger Disconnect

A Million vs A Billion vs A Trillion

Let’s break it down:

• 1 million seconds = 12 days
• 1 billion seconds = 31.7 years
• 1 trillion seconds = 31,709 years

That’s the scale we’re dealing with. Now apply that to money.

• $1 million might buy three modest homes.
• $1 billion builds 10,000 public houses.
• $368 billion – the cost of AUKUS subs – could fund universal dental, free uni, AND build 1 million homes.

So why don’t we feel it? Because we’re not supposed to.

Could you spend a trillion dollars in your lifetime?

Where the Government Actually Spends Our Public Money

The 2024–25 federal budget outlines over $730 billion in planned spending:

Defence: $53.4 billion (expected to rise to $100B with AUKUS)

Health ($110 billion):

• This includes public hospital funding (via state/territory block grants), including Medicare, PBS, and aged care services.
• It also includes subsidies for private health insurance (around $6–7 billion annually).
• Some funding goes to private sector providers delivering publicly funded services.

Education ($41 billion):

• This includes Commonwealth funding for public and private schools (the latter receives a significant portion, more than public schools).
• Covers funding to universities and TAFEs, though much of this is skewed toward universities.
• Private school subsidies are estimated to exceed $15 billion over several years.
• Fossil fuel subsidies: Estimated at over $11 billion
• Corporate tax concessions: Tens of billions lost in loopholes

✅ Meanwhile:

• Public housing stock is falling.
• TAFE campuses are closing.
• Regional bank branches are vanishing.
• Out-of-pocket health costs are rising.

Source: Budget.gov.au

Dr. Steven Hail’s extensive work in Modern Monetary Theory (MMT) and critiques of neoliberal economic policies consistently highlight how public funds are often directed toward private sector benefits.

What These Billions Could Really Do

Submarines vs Society

If they arrive at all, $368 billion for nuclear submarines won’t arrive until 2040. But the need is now:

• That sum could fund dental care for all Australians, every year for the next 40 years.
• Or build one million public homes – ending homelessness and easing rental stress.
• Or abolish all HECS debt and restore free university education.

Fossil Fuel Subsidies vs a Clean Future

While firestorms and floods devastate communities, fossil fuel giants such as Woodside and Santos receive over $11 billion in annual subsidies.

Imagine instead:

• Solar panels and batteries for 2 million homes
• National job guarantee in renewable industries
• Revived rail infrastructure and rural transit

“It feels like the government is fuelling the fire while we’re burning,” said one bushfire survivor in northern NSW.

Australia’s Dollar Sovereignty: A Hidden Superpower

Unlike households or states, Australia issues its own currency – the Australian dollar.

What This Means

• We can never run out of Australian dollars.
• Our spending limit is not revenue, but inflation and available resources.
• Budget surpluses shrink the economy; deficits grow, especially in downturns.

As an Economist, Professor Bill Mitchell puts it:

“A sovereign currency issuer can afford anything for sale in its own currency. The constraint is political, not financial.”

So why are services underfunded while corporate tax cuts and military expansions thrive?

Because the myth of “fiscal responsibility” is weaponised to serve those already in power.

Government Spending: Investment or Burden?

When people hear the term government spending, they often think of waste or handouts, but it is shaped more by ideology than economics.

Government infrastructure is crucial for health and future prosperity. It’s how nations build roads, fund education, protect the environment, and respond to emergencies like floods or pandemics.

Misunderstanding Government Spending Holds Us Back

Thanks to decades of neoliberal messaging, many Australians believe public spending should be minimised to avoid “burdening taxpayers.” But this framing ignores two key facts:

* Government spending creates jobs, boosts productivity, and strengthens the economy.
* When the federal government spends, it injects money into the economy, not removes it.

As economist Mariana Mazzucato notes, “The state is not just a market fixer. It’s a market shaper.”

Smart Government Spending Builds Nationhood

Think of Medicare, the ABC, the NDIS, public libraries, and clean water systems. These weren’t market creations – they resulted from visionary government spending.

When spending is strategic, transparent, and equitable, it:

* Reduces inequality.
* Fosters innovation.
* Strengthens communities.
* Improves long-term well-being.

Australia’s challenge isn’t too much spending – it’s spending in the wrong places. Government spending can be used for the public good if the government has the will to do so.

What $1 Billion Could Buy Instead?

To make it real, here’s what just $1 billion could fund:

• 10,000 new public housing units
• 50,000 students’ university tuition
• Free dental care for 1 million Australians
• 25,000 full-time public sector jobs
• 500 new bulk-billing GP clinics
• Reopen 100 TAFE campuses across the country

“We’re told we must choose between health, education, and housing – but there’s enough for all three. We need to change the priorities.” – Community advocate, Melbourne.

Why Doesn’t It Happen?

Neoliberalism’s Legacy

• For decades, both major parties have embraced privatisation, deregulation, and surplus fetishism.
• Services are defunded, sold off, or corporatised.
• Profit trumps people, and donations keep politicians quiet.

Media Misinformation

• Dominant media outlets blur the lines between public and private interest.
• Citizens are fed soundbites, not substance.
• The myth: “Australia is broke.”
• The truth: “Australia chooses not to spend on you.”

Reclaiming Public Money for the Public Good

Redirect Resources

Other nations prove what’s possible:

• Norway uses its sovereign wealth to fund universal services, while Australia gives away its gas.
• Germany and Finland offer free higher education
• China, using its currency sovereignty, has lifted 800 million out of poverty while building modern cities and infrastructure

Australia could:

• Cancel HECS debt and make education free again
• Establish a National Housing Authority
• Guarantee jobs through direct public employment
• Fully fund NDIS, Medicare, and dental care under one roof

Invest in the People, Not Corporations

Public money should serve:

• Wellbeing
• Sustainability
• Equity
• Community resilience

It’s time to reverse the flow of government spending – from corporate welfare to citizen care.

It’s Not the Missing Money – It’s the Missing Will

Australia is not short of money. It is short of political courage and media honesty.

For decades, our leaders have chosen defence contractors over hospitals, donors over students, and profits over people. But we are not powerless.

When we understand the truth about government spending and dollar sovereignty, we gain the power to demand a future that serves all of us.

Q&A Section

Q: What is dollar sovereignty, and why does it matter?

A: It means Australia issues its own currency, allowing it to spend to meet public needs, so long as inflation and real resources are managed. It debunks the myth that “we can’t afford” public services.

Q: What’s wrong with billion-dollar defence spending?

A: It’s a long-term, high-risk, low-return investment that benefits private contractors while neglecting urgent public needs like housing, healthcare, and climate resilience.

Q: What can I do as one citizen?

A: Get informed. Share independent media. Support candidates and policies that prioritise public spending for the public good.

Question for You

Have you or someone you know struggled under poor government spending choices? What would you fund with a billion dollars?

Please share your thoughts in the comments below.

Call to Action: Demand Better Use of Our Public Money

If you found this article insightful, explore more about political reform and Australia’s monetary sovereignty at Social Justice Australia.

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This article was originally published on Social Justice Australia

 

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