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Government Roles

Economics (Year 11) - The Public Sector

Carys Brown

What is the Public Sector?

The public sector is the section of the economy that refers to the role of the government providing services and their spending on local, state and commonwealth levels. Due to the pandemic, government spending has increased to above $115b as of September 2021 according to

The Commonwealth Government funds their spending from different kinds of taxes. In order for this to be fair, taxes cannot be too high, efficient and simple. The public sector also includes government-funded services such as transport, education or defence.

Government Roles

Governments have an allocative, redistributive, regulatory and management role within the economy.

  • Allocative: Governments allocate resources that are under-provided by private markets. These include resources, goods and services such as education or public transport.

  • Redistributive: Using tax collected money, governments can redistribute these funds to make society more equitable.

  • Regulatory: This refers to preventing market failure. For instance, monitoring monopolistic powers or externalities.

  • Management of Macroeconomic Objectives: This means that governments are responsible for using fiscal policies to achieve full employment, GDP targets, equity and price stability.

Government Spending

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