Why the Government Loves Red Ink—and Your Rising Home Value

Acknowledgement

We come from bricks and mortar, not economics and balance sheets. This blog post only came together thanks to the patience and insight of Paul S., whose clear explanations turned a spaghetti-bowl of macro-economic concepts into something we could actually understand. His willingness to break down complex ideas into plain language, answer our questions, and help draft this post greatly enhanced its accuracy and readability.

Peter, Paul … and the Federal Budget

Grab two mates, 40 poker chips and a kitchen table. Give Peter 20 chips and Paul 20 chips, then slide 10 of Paul’s across to Peter. Peter flashes a smile—he’s “in surplus.” But notice the mirror image: Paul is instantly 10 chips “in deficit.” Australia’s public finances work the same way.

When Canberra books a $15.8 billion surplus for 2023-24 it hasn’t magicked up extra wealth; it has swept that same $15.8 billion out of households’ and businesses’ bank accounts. Treasury’s own forecasts tip the ledger back to a $28 billion deficit next year as bracket-creep tax cuts shrink revenue —because if the government keeps pocketing chips, we eventually run out of them.

Economists call this see-saw the sectoral-balance identity: public-sector red ink equals private-sector black ink (plus the trade balance), and it must add to zero.

Surpluses feel good, but they’re simply Peter pinching Paul’s chips—only Paul is every Australian mortgage-holder, student-debt payer and small-business owner.

Money 101: Every Dollar Is an IOU

Long before plastic notes, Australia’s first national banknote (10 shillings, 1913) declared: “The Treasurer … promises to pay the bearer in gold coin on demand.” Even today each plastic fiver is the Reserve Bank’s liability—an IOU you can swap for anything because we all trust the promise.

Most dollars never exist as paper. Roughly 80 per cent of the money supply appears when a commercial bank approves a loan: the bank types a deposit into your account and books a matching loan asset. Repay the loan and those electronic dollars vanish. The Bank of England said it best: “Loans create deposits.” (VIDEO EXPLAINER BELOW)

Government dollars work the same way—just bigger.

Modern Monetary Theory (MMT) notes that the Commonwealth spends first (marking up reserve accounts at the RBA) and taxes later to drain excess cash and keep inflation in check. Taxes aren’t the fuel tank; they’re the brakes.

Why someone must always owe someone else. Because every dollar is an IOU, the sum of all financial assets exactly equals the sum of all financial liabilities. A world where everyone “lives within their means” at the same time would have no money at all.

Australia’s public books and private bank accounts are locked together by a simple bit of arithmetic called the sector-balance identity. It says that the financial balance of the government sector, the domestic private sector, and the foreign sector must always sum to zero.

If Canberra slides into surplus, either households/businesses or the rest of the world must slip the exact same amount into deficit. There’s no escaping the see-saw, because it’s just double-entry bookkeeping on a national scale.

The Peter-Paul Principle: Why One Sector’s Surplus Is Another’s Deficit

2.1 What the identity says

Economist Wynne Godley first set the framework: add up the net saving of every sector and the total must be zero. A government surplus (taxes > spending) pushes the private sector negative unless the foreign sector delivers an offsetting surplus of its own. Think of the chips: Peter can’t gain ten without Paul losing ten.

2.2 Australia’s numbers in action

• Howard/Costello era (1998-2007). Repeated federal surpluses coincided with an explosion in household debt; the debt-to-income ratio more than doubled over those eleven years.
• Mining and the current account. Over the past decade our record trade surpluses flipped the current account into the black, adding a foreign-sector surplus to the equation. To keep the identity balanced, either Canberra must run a deficit or households must borrow less—there’s no third option.
• 2023-24 “back-in-black” moment. The $15.8 bn surplus Treasury booked last year rode on mining royalties, yet household debt stayed near record highs because private borrowing had to fill the fiscal gap.

2.3 Why balancing all three sectors is impossible

Imagine Canberra vows perpetual surpluses while the current-account surplus persists. Without government red ink, the private sector’s books would have to bleed the difference—meaning higher credit-card balances, fatter mortgages, or business cut-backs that tip the economy into recession. As was once quipped about the UK, a surplus is often just a political cover for shrinking the state, not genuine prudence.

What is Modern Monetary Theory (MMT)?

MMT is just a tidy description of how a modern, sovereign-currency government like Australia’s already pays its bills. Canberra spends first by marking up reserve accounts at the RBA, then taxes later to make room in the real economy and keep prices steady. Understanding that order of operations helps explain why balanced-budget mantras clash with everyday reality.

3.1 Spending comes before taxing

When Treasury tells the Reserve Bank to pay a supplier, the RBA simply credits the supplier’s bank. That keystroke creates new Australian dollars; no pile of pre-existing tax revenue is shuffled over first. The Bank of England confirmed this “loans create deposits” mechanism for government and commercial money alike in its landmark 2014 bulletin (see Richard Murphy video above for more).

MMT formalises the point: a currency-issuing government “can never run out of money; it can only run out of things to buy.” The overdraft it runs with its own central bank is an internal IOU—one arm of the public sector owing another.

3.2 Taxes are the drain plug, not the fuel tank

Because new dollars enter the economy with every deficit dollar spent, something has to mop up any excess or inflation would take off. Taxes perform that mop-up job. By levying income tax, GST, fuel excise and—yes—stamp duty, governments delete part of the money they previously created. The Levy Institute notes that this “tax-drain” function is central to keeping demand in line with productive capacity.

Crucially, taxes also give the currency value: you accept Aussie dollars because the ATO demands nothing else on 30 June. That compulsory loop underwrites the dollar’s credibility.

3.3 Why bond issues aren’t “borrowing” in the household sense

Canberra still auctions Treasury bonds, but not because it needs the cash. Bonds offer super funds and banks a rock-solid place to park savings; they swap reserve balances for a time-deposit with interest. As the Bank for International Settlements notes, governments choose to issue bonds mainly to support financial-market plumbing, not to finance spending.

3.4 Inflation guard-rails

MMT does not say “print forever.” If demand outruns real resources—skilled labour, steel, timber—prices will climb. In this way the government must either raise taxes to free up room or pull back spending. The Australian Bureau of Statistics’ recent commodity-price spikes show how quickly capacity constraints can bite.

3.5 Policy superpowers that follow

• Full-employment spending: As long as idle builders or nurses are available, deficit outlays can hire them without stoking inflation.
• Low-rate bias: Keeping interest rates low reduces the upward redistribution that comes with mortgage and business-loan interest, shrinking inequality.
• Targeted credit controls: Regulators can lean on banks to curb speculative lending (e.g., investor mortgages) instead of blanket rate hikes that hit everyone.

Australia’s mining sector continues to pump record profits and royalty cheques into government coffers, while Treasury swings from a $15.8 billion cash surplus in 2023-24 back to a forecast $28.3 billion deficit in 2024-25.

The combo leaves Canberra walking a tightrope: if it doesn’t recycle the resources windfall through deficit spending, households (already carrying one of the world’s highest debt-to-income ratios) have to borrow even more to keep the economy moving. The numbers below show why the “two-speed” mix of mining booms and budget gaps has become the defining cash-flow dynamic of modern Australia.

4 | Australia’s Two-Speed Cash Flow: Mining Booms vs Budget Gaps

4.1 The mining money keeps gushing in

• Profits stay eye-watering. Mid-tier miners booked a combined $52 billion in revenue and $18 billion EBITDA in FY 2024, even after softer iron-ore prices.
• Tax + royalty haul hits new highs. In 2022-23 the sector delivered $74 billion to federal, state and territory governments—$42.5 billion in company tax and a decade-high $31.5 billion in royalties.
• A single private player tells the tale: Clive Palmer’s Mineralogy still cleared $88 million net profit and paid $118 million in tax in FY 2024 despite a 30 % profit dip.

4.2 Current-account flips the sectoral maths

• Australia ran a $11.8 billion current-account surplus in the Dec-2023 quarter—the eighth straight quarter in the black. That foreign-sector surplus must be offset by either a government deficit or a private-sector deficit.

4.3 Why Canberra has to recycle the boom

• Treasury used the royalty tide to post back-to-back cash surpluses, including $15.8 billion (0.6 % of GDP) in 2023-24. But the 2024-25 Budget already projects a $28.3 billion deficit as resource prices ease.
• Running perpetual surpluses would force households or businesses to take on equivalent debt. During the 1998-2007 Howard–Costello surplus run, the household debt-to-income ratio more than doubled—from ~70 % to 150 %.

4.4 What happens when government doesn’t spend the royalties?

• RBA research shows high debt ratios amplify the risk of downturns, because indebted households slam the brakes on spending faster.
• Sector-balance modelling (Godley/Levy Institute) confirms that a public surplus + external surplus must mathematically drive the private sector negative.
• In other words: if Canberra pockets the mining cash and chases a surplus, mortgage holders would need to borrow or liquidate assets—pushing the economy toward recession.

5 | Housing: Australia’s Favourite Piggy-Bank

Australian households don’t keep their wealth in cash or shares—they park it in bricks and mortar. Roughly two-thirds of all household net worth (about $11 trillion out of $16 trillion) sits in residential land and dwellings, according to the ABS’s March-2024 finance and wealth accounts.

Because that pile of equity is both big and (mostly) illiquid, governments treat it as a reliable tax base and, in practice, a backstop for decades of federal deficits.

5.1 Why property dominates private balance-sheets

• Compulsory super + property make up 75 % of net household wealth—a structure that leaves families “asset-rich, cash-poor.”
• Cheap credit, tax favours, and cultural bias all funnel savings into housing, driving prices (and paper wealth) ever higher over the past 30 years.

5.2 The tax system is set up to harvest those gains

5.3 High prices help government keep red ink under control

• Every $1 trillion lift in dwelling values widens the stamp-duty and CGT base by roughly $4–5 billion a year, based on Grattan Institute and Treasury.
• Rising valuations also prop up land-tax receipts, which several states are quietly indexing faster than inflation. (Victoria’s land-tax take is slated to rise 25 % over the forward estimates.)
• When prices sag, those same revenues shrink, forcing deeper deficits or austerity. That gives policymakers a powerful, if rarely stated, incentive to keep the property market buoyant.

5.4 Negative gearing & CGT discount: the turbo-chargers

• The twin concessions cost the federal budget about $20 billion a year in foregone revenue yet remain politically sticky because they inflate household wealth on paper.
• Academic modelling shows scrapping the CGT discount alone could shave 4–5 % off capital-city prices—good for affordability, bad for Treasury’s future CGT haul.

5.5 Why stamp duty refuses to die

• Economists call it Australia’s “worst tax,” but states can’t quit—NSW collected $7.6 billion in 2022-23, its second-largest revenue source.
• A nationwide shift to broad land tax would add up to $17 billion to GDP, yet the politics of replacing such a dependable cash faucet remain brutal.

Why Canberra Quietly Prefers Deficits and High House Prices

The three-sector see-saw leaves the Commonwealth with a choice: keep running modest deficits that drip extra dollars into household bank accounts—or watch private debt and unemployment explode.

Add in a tax system that skims billions from every uptick in property values, and it’s clear why policymakers rarely gamble on long-lasting surpluses.

6.1 Deficits top-up household cash so the wheels keep turning

• Treasury’s own Budget papers show the one-off $15.8 billion surplus in 2023-24 flips to a $28 billion deficit in 2024-25 and $43 billion the year after—because without that red ink, growth would stall.
• The current-account has been in surplus since 2019 thanks to mining exports, meaning either Canberra or households must run a matching deficit. Deficits are the gentler option; otherwise families pile on more credit-card and mortgage debt.

6.2 High house prices quietly plug the revenue gap

• Stamp duty alone raked in $27.5 billion in 2022-23—15 % of all state own-source revenue.
• Federal coffers lean on the CGT discount + negative gearing, concessions that cost about $20 billion a year but also keep investor demand (and taxable capital gains) humming.
• States have begun hiking land-tax assessments to compensate for softer turnover; Victoria’s land-tax take is projected to rise more than 20 % across the forward estimates.
• From July 2025, unrealised gains on super balances above $3 million will be taxed at 30 %, signalling Canberra’s willingness to tap stored equity directly.

6.3 Rate cuts show the feedback loop in real time

• The RBA’s May 2025 cut to 3.85 % saw capital-city auction volumes jump 40 % in a week and the preliminary clearance rate hit 71 %.
• Media coverage the same week noted a 0.5 % rise in national dwelling values and fresh buyer optimism.
• Higher turnover instantly fattens stamp-duty inflows, cushioning the deficit that helped make the rate cut possible in the first place—a neat circular bonus for treasuries.

6.4 What if Canberra chased permanent surpluses?

• The Howard–Costello surplus streak (1998-2007) coincided with household debt-to-income ratios rocketing from ~70 % to 157 %.
• ABS data show average household debt still rising—up 7.3 % in 2021-22—even before the latest mortgage surge.
• Re-running that experiment today, with already-record debt and sluggish wage growth, would risk a wave of forced sales—shrinking the very stamp-duty and CGT base governments now rely on to manage past and future deficits.

6-A | Milton Friedman: “Deficits Aren’t the Villain—Overspending Is”

Milton Friedman, the Nobel-winning Chicago-school economist, rarely lost sleep over red ink itself. His worry was that high government outlays, however financed, eventually sap private productivity and freedom. Below is how he framed the issue—and why his perspective still matters when we talk about Australian budgets and house prices.

6-A.1 Spending is the real burden

• “A so-called deficit is a disguised and hidden form of taxation. The real burden on the public is what government spends,” Friedman wrote in Bright Promises, Dismal Performance in 1983.
• In a 1981 Newsweek column he warned that bigger deficits weren’t the danger—runaway outlays were.

6-A.2 Why deficits can be a political restraint

• Interviewed in the early 2000s, Friedman said that deficits “have their virtues, because they are the one thing that brings pressure on Congress to hold down spending.”
• He called this a “second-best solution,” but better than letting Canberra (or Washington) raise taxes quietly to fund ever-larger programs.

6-A.3 Cut taxes first, force discipline later

• Friedman’s rule of thumb: “Cut taxes anytime, in any way, in any form”—because lower revenue today forces politicians to trim expenditures tomorrow rather than hike levies.
• He even argued that surpluses can be dangerous: they tempt governments to launch new spending sprees instead of returning cash to citizens.

6-A.4 Applying Friedman to Australia

• Australia’s decade of commodity windfalls shows the risk Friedman flagged: royalty jackpots feed calls for new programs, lifting the spending baseline even when revenue normalises.
• By contrast, modest, predictable deficits tied to essential infrastructure or a Job-Guarantee buffer (Section 8) keep the focus on productive outlays rather than temporary sugar hits—still consistent with Friedman’s insistence on spending discipline.
• And while Friedman favoured low taxes, he also stressed transparent financing; property-based levies like land tax score higher on visibility than stamp duty hidden in mortgage paperwork, strengthening voter oversight of state budgets.

6-A.5 Deficits ≠ blank cheques

• Friedman rejected the idea of endless borrowing—if deficits persist because politicians duck hard spending choices, they merely defer the tax bill and risk inflation.
• His litmus test: does each dollar of outlay deliver more value than if left in private hands? If not, cut it—surplus or deficit.

6-B | Immigration, the Tax Base & the Big-Four Banks

A steady flow of new workers and customers lets Canberra grow revenue faster than spending and keeps wages (hence inflation and bond yields) in check. At the same time, Australia’s big-four banks channel much of that extra income into mortgages, clipping a tidy margin while transferring government-created money into private housing debt.

Here’s how the puzzle pieces fit—plus a reality-check on Australia’s public-debt ratio compared with other rich economies.

6-B.1 Record inflows keep the revenue tap open

• Net overseas migration added 446 000 people in 2023-24, only slightly below the 2022-23 record of 536 000.
• The population hit 27.3 million in September 2024, with migrants accounting for 1.4 percentage points of the 1.8 % annual growth.
• Treasury’s 2025-26 Budget expects higher participation by new arrivals to lift PAYG and GST receipts, helping to hold the deficit near 1.2 % of GDP despite softer commodity prices.

6-B.2 More workers, lower wage pressure, cheaper debt

• The RBA notes that strong migration “adds to labour supply and helps contain unit-labour-cost growth,” easing the path back to the 2–3 % inflation target.
• Lower inflation keeps bond yields and hence government interest costs in check; the May 2025 cash-rate cut to 3.85 % followed a slide in trimmed-mean inflation to 2.9 %.
• A subdued wage pulse lets Canberra roll over stockpiled debt at historically low real rates, shrinking the effective burden on future budgets.

6-B.3 Where the big four banks fit in

• Ticket clipping: Each fresh migrant household that buys or rents pushes demand for credit higher; banks originate the mortgage, book an upfront fee, and harvest interest margins for 25-plus years.
• Balance-sheet expansion: Because bank lending creates deposits, the majors effectively transform government-injected dollars (deficits) into private mortgage debt—mirroring the sector-balance identity at the micro level.
• Bond-market plumbing: The same banks sit on the dealer panels that make markets in Commonwealth Government Securities, recycling household savings (often via super funds) back into the bond stock.

6-B.4 Putting it together

High immigration adds taxpayers today and future homeowners tomorrow. That twin boost lets Canberra:

1. Collect more PAYG and GST now, narrowing the primary deficit.
2. Lean on a larger labour pool to restrain wage-inflation—and therefore bond yields.
3. Rely on the big banks to funnel savings and new earnings into property, propping up the very tax bases (stamp duty, CGT, land tax) that backstop the budget.

6-B.5 Debt-to-GDP snapshot – Australia vs. big peers

(Australia’s international comparisons often use gross debt; we remain well under half the G-7 average.)

Why this matters:

• Australia’s lighter debt load means bond investors demand lower yields, especially when strong migration helps cap wage inflation. Lower yields shrink the interest bill Canberra pays to bond-holders.
• By contrast, the U.S. is now spending US $684 bn a year on interest—almost the size of Australia’s entire federal budget.
• Immigration keeps Australia’s debt metrics favourable twice over: it adds tax-paying workers (lifting the denominator, GDP) and eases labour-cost pressure, reducing the risk that higher inflation forces the RBA to hike rates and push bond costs up.

Banks’ part in the loop: with gross debt low and AAA-rated, Australian Government Securities attract foreign buyers, while the big four banks act as primary dealers, helping auction bonds and holding inventory for super-fund clients. Simultaneously they convert the extra wages and savings that migration brings.

In short, high migration enlarges the tax-paying workforce, tempers wage-inflation (so debt is rolled at cheaper rates), and supplies a stream of would-be borrowers whose mortgages the big four eagerly originate—shifting public-sector IOUs into private housing debt and pocketing a spread along the way. It’s the quiet feedback loop that stitches people, banks and the Budget together.

What If Canberra Insisted on Surpluses?

Imagine a Treasurer who vows to keep the Commonwealth permanently “in the black.” On paper it sounds thrifty; in practice it would push the private sector into the red at break-neck speed. Here’s what the numbers—and the RBA’s own stress tests—say would happen.

Milton Friedmans Thoughts About Inflation (who creates it)

7.1 We’ve tried a mini-version before

• Howard–Costello years (1998-2007). Nine straight cash surpluses coincided with household-debt-to-income ballooning from about 70 % to 157 %—one of the sharpest run-ups in the OECD.
• The BIS paper tracking that era shows housing debt did almost all the heavy lifting, surging from 31 % to 134 % of disposable income.
• Put bluntly: the Commonwealth stopped borrowing, so families had to.

7.2 Fast-forward to 2025: the maths is crueler

• Australia now starts with a household-debt-to-income ratio around 190 %, already the second-highest in the developed world.
• If Canberra chased a sustained surplus while the current-account remained in the black, private borrowing (or dis-saving) would need to cover roughly $30 billion a year.

7.3 Stress-test: plug the gap with mortgages—then prices fall

The RBA ran a downside scenario in 2022 assuming a 20 % drop in house prices and a jump in unemployment above 10 %. Banks remained solvent, but capital ratios shrank by almost 2 percentage points, and negative-equity loans tripled.

• A fresh 20 % fall today would push about 11 % of mortgages underwater, the RBA estimates, especially in newer outer-suburb builds.
• Treasury’s sensitivity tables show every 10 % slide in dwelling values chops around $2 billion off annual CGT receipts; a 20 % fall doubles that hit, leaving the next surplus goal in tatters.

7.4 Stamp-duty and CGT dominoes

• States would lose roughly $4–5 billion a year in stamp duty if median prices fell 20 %, using Grattan Institute elasticity estimates.
• Lower turnover slashes GST and trades-income tax as well, deepening the hole Canberra had hoped to plug.

7.5 Private-sector shock absorber? Already full

• RBA’s 2024 Financial Stability Review warns that even without a crash, higher-than-expected rates or unemployment could magnify borrower stress because buffers are thinner than pre-pandemic.
• Household saving has dropped back near zero; there’s little firepower left to absorb new tax grabs that a surplus strategy would require.

8 | Smarter Ways Forward — Keeping the Wheels Turning Without Leaning Only on House Prices

Australia doesn’t have to choose between endless public red ink or turbo-charged mortgages. Below are five policy levers that economists keep pointing to. None are silver bullets, but together they can recycle mining profits, keep demand humming, and take the heat out of property speculation.

8.1 Swap stamp duty for a broad-based land tax

• Why it helps: Stamp duty slugs buyers up-front, discourages downsizing and freezes people in the “wrong” homes. A broad annual land tax would spread the bill, cut the barrier to moving, and add up to $17 billion a year to GDP.
• Evidence: The ACT’s 20-year transition shows it’s politically doable; NSW’s short-lived First Home Buyer Choice hinted at the benefits before it was shelved.
• Design tip: Credit low-income owner-occupiers and farmers, phase in slowly, and keep the rate flat so it can’t be gamed.

8.2 Make miners pay a fair share through a stronger resource-rent tax

• Problem: The existing Petroleum Resources Rent Tax and royalty system lets some LNG exporters book windfall profits while paying single-digit effective tax rates.
• Fix: Tighten deduction caps and anti-avoidance rules—Treasury’s January 2024 PRRT update points the way.
• Pay-off: The Australia Institute estimates $18 billion extra over four years from modest tweaks—cash that could fund social housing or infrastructure without leaning on stamp duty.

8.3 Guarantee jobs before chasing surpluses

• Idea: A federally funded Job Guarantee offers work at a basic wage to anyone who wants it, acting as a buffer stock of employed labour instead of unemployed labour.
• Numbers: University of Newcastle’s CofFEE modelling shows cutting unemployment from 10 % to 4 % would cost about $52 billion a year—roughly what we already spend on JobSeeker, tax concessions and compliance.
• Inflation guard-rail: Jobs are limited to socially useful roles (landcare, aged-care support) so they don’t bid resources away from the private sector.

8.4 Use targeted credit controls instead of across-the-board rate hikes

• Works in practice: APRA’s 2017 cap on interest-only loans and its 2021 increase in the serviceability buffer cooled investor lending within months—without smashing first-home buyers.
• Keep in the toolkit: Lift risk-weights on high-LVR investor mortgages, or cap debt-to-income ratios when prices start overheating again.

8.5 Accept small, steady deficits as the price of full employment

• Reality check: Treasury’s own Mid-Year Outlook shows a $26.9 billion deficit in 2024-25 even after a one-off surplus, and net debt still sits below half the advanced-economy average.
• Why that’s fine: So long as spending targets idle capacity, deficits add real assets—better rail, greener power—not just higher house prices.
• Bonus: Low public-debt ratios keep Australia’s AAA rating intact, meaning borrowing costs stay rock-bottom for decades-long infrastructure projects.

Conclusion

Money is nothing more than an IOU, and the national accounts are just a huge double-entry ledger. When the Commonwealth runs a surplus, the private sector must—in kind—run an equal-sized deficit. Over the past quarter-century, that private-sector hole has been filled mainly with household mortgages, turbo-charged by generous tax breaks and kept afloat by a stream of mining royalties.

Today roughly two-thirds of all household wealth sits in housing, states rake in billions each year from stamp duty, and the federal budget depends on capital-gains tax that only materialises if prices keep rising .

Running modest, well-targeted deficits remains the smoother option. Treasury itself expects the $15.8 billion surplus recorded in 2023-24 to swing to a $28.3 billion deficit next year because, without that red ink, households—already carrying debt worth about 190 % of their income —would have to borrow even more, risking a downturn.

The Reserve Bank’s latest stress test shows that a 30 % price fall would push roughly one in nine mortgages into negative equity, slashing stamp duty and CGT just when governments would need them most.

Australia has alternatives: broaden land tax, tighten resource-rent taxes on gas exporters for an extra $18 billion over four years, and accept small, steady deficits that keep people working and businesses investing.

Deficits aren’t a moral failing—they’re the accounting mirror of our private-sector savings. The real test of fiscal responsibility is not whether the federal books are in the black, but whether Australians have jobs, services and a roof they can afford.

Why We Wrote This Post

We spend most of our days refining business processes, planning projects/budgets/cost plans and hashing out construction details with consultants, suppliers, designers, and clients—not poring over Treasury tables.

Lately, though, we’ve been digging into why government action on housing affordability feels underwhelming, especially as immigration lifts demand faster than new supply appears.

The deeper we looked at terms like sector-balance maths, Modern Monetary Theory, and the way federal budgets lean on house prices, the clearer it became: every homeowner is already part of the economic game, whether they realise it or not.

This post shares that journey. If we’ve done the job right, you now see:

• Why a “government surplus” often ends up as extra debt on household balance sheets.
• How mining royalties, immigration, and the big four banks all feed into the property-price loop.
• Why small, well-targeted deficits can keep the wheels turning without sending mortgage payments—or power bills—through the roof.

Of course, we’re telling the story through our own rose-coloured glasses. Bias is hard to escape. Our solution? Lay out our position—with plenty of help from Paul—then invite others to critique it so we can all gain more clarity and understanding.

Meanwhile, we’re still polishing the Fixing Stage Quality Management Checklist and expect to wrap it up this weekend. We’ll return to more construction-specific topics soon, giving these economic concepts time to sink in.