Economics is really important! The good news is, it is also a lot simpler than you have been led to believe.
The NDIS is really important as well. That’s why we think it is really important to bring an understanding of these two things more closely together.
Way back in the 1990’s, our founder Adrian McMaster studied economics within his first degree from Melbourne Uni. It is one of the reasons that he is really good at helping people manage their NDIS budgets! Within that economics degree, little time was spent learning about how money actually worked. This is a common theme in economics training. It is also a terrible shame, as it means that generations of economics graduates – people who go on to become journalists, politicians and, of course, economists, don’t really know where money comes from. Indeed, they quite often get money almost exactly wrong. As you can imagine, this makes for some bad decisions.
The truth is, Australian Dollars are created by the Australian Government (aka ‘the Commonwealth’). The Commonwealth either creates these dollars directly by spending, indirectly through the wholly-owned RBA or by licencing private banks to create new money which they loan out to customers. The dollars created in any of these three ways are interchangeable with each other. That’s what makes them all Australian Dollars.
The key to always remember is that Australian Dollars are created by the Australian Government. This simple fact changes the whole way in which the Australian economy should be viewed – and especially that part of the Australian economy that involves Government spending. Like the NDIS.
Because Australian Dollars come from the Australian Government, the Australian Government can’t run out of them. What’s more, the Australian Government does not need to raise taxes in order to spend money. In fact, when taxpayers pay tax, they are sending money back to the Government. Tax is still very important, but not for raising money.
We understand that the above might not make immediate sense to you. That’s why we encourage you to follow the links below to understand why (i) the Australian Government does not need taxes to finance it’s spending and, therefore, (ii) why the NDIS will always be financial affordable.
Australia Does Not Really Have a National Debt
How Modern Money Works – a (Really) Deep Dive (link to external website with a lot of information)
The Four Different but Similar Types of Australian Money (and where they come from).