Former Treasurer Joe Hockey tried to explain it simply to ordinary Aussies by comparing the national budget to the household budget. Heaps of debt is bad, he said, having money in the bank is good. That’s a bit of an oversimplification, but it’s the message many people took away. 

The problem is, macroeconomics and a household budget are actually two very different things. In fact, the only thing they really have in common is that they both involve money.

If you personally run up heaps of debt and can’t pay it off then people will turn up to take things off you. At worst, you can declare bankruptcy. Conversely, you can pay off debt and save some money for a rainy day.

However, countries can’t really go bankrupt. I mean, they can run out of cash and get themselves into a terrible mess, but if they refuse to pay their debts no one can come knocking at the door. Don’t believe me? In 2002, Argentina defaulted on its debts, but it took 10 years before anyone could do anything about it.

On the other hand, having big piles of cash around is incredibly wasteful from an economic perspective. Those piles of cash are unbuilt roads and hospitals, education programs that never ran and investments into businesses that never got off the ground. They are also a wasted opportunity to do some financial magic and improve the economy. 

Budget surpluses are usually a good thing, but when they get too big they’re incredibly wasteful and a sign of a fundamental misunderstanding of economics.

Which brings me back to the NSW Budget and Griffith in particular. NSW Treasurer Gladys Berejiklian handed down a budget with a $3.4 billion surplus, which means the state has plenty of cash to fund projects that are, as yet, unannounced.

But I wonder if perhaps a $3.2 billion surplus, along with a brand-new public hospital for Griffith, wouldn’t be as good, if not better, because at the moment there’s a big need and a missed opportunity.

-STEPHEN MUDD